Malaysia: Malaysia is positioning itself to move beyond its long-standing leadership in assembly, testing, and packaging towards leadership in advanced packaging as artificial intelligence (AI) reshapes the global semiconductor industry.
According to BERNAMA News Agency, Malaysian Investment Development Authority (MIDA) chief executive officer Datuk Sikh Shamsul Ibrahim Sikh Abdul Majid emphasized the importance of advanced packaging, which is underpinned by chiplet architectures and heterogeneous integration, making it central to AI compute scaling. This positions Malaysia directly in the industry's next phase of growth.
Malaysia's semiconductor ecosystem, concentrated in Penang, Kulim, and the Klang Valley, currently hosts over 50 multinational semiconductor companies, providing a direct pathway for the country to transition into next-generation manufacturing. 'Our existing infrastructure positions us directly in this transition path, and we intend to invest accordingly,' Sikh Shamsul Ibrahim stated during his opening remarks at the Market and Industry Outlook Forum held on May 6, in conjunction with SEMICON Southeast Asia 2026.
Sikh Shamsul Ibrahim highlighted that the global semiconductor industry is nearing the trillion-dollar mark, with revenues projected to rise from approximately US$790 billion in 2025 to a forecasted US$975 billion in 2026. He noted that semiconductors are now considered strategic infrastructure, comparable to energy and food security. AI is the single largest driver of industry expansion, with AI accelerators, high bandwidth memory, and data centers expected to account for the majority of semiconductor growth through the end of the decade.
Furthermore, Southeast Asia is strategically positioned to capture 25 percent of global assembly, testing, and packaging capacity by 2032. Sikh Shamsul Ibrahim described the current semiconductor cycle as 'not a normal one,' driven principally by AI-related demand and rising prices. He emphasized that investors who expanded capacity during the last correction are now best positioned, and Malaysia's policy is to support firms with a long-term perspective.
He acknowledged that much of Malaysia's semiconductor base remains in traditional industry segments, where growth is expected to be more modest compared to advanced AI-related technologies. Without accelerated movement up the value chain, revenue growth may lag behind the broader market.
Malaysia recorded its highest-ever approved investments at RM426.7 billion in 2025, including RM131.3 billion in the manufacturing sector and RM28.5 billion in electrical and electronics (EandE). The Milken Institute's 2026 Global Opportunity Index ranks Malaysia as the top investment destination in Southeast Asia.
To strengthen its position, the National Semiconductor Strategy aims to train 60,000 high-skilled engineers, anchor at least 10 Malaysian companies of regional or global scale in design and advanced packaging, and increase Malaysia's global semiconductor market share to 14 percent by 2029. The strategy also focuses on building greater depth in integrated circuit (IC) design and power semiconductors, supported by government-backed design parks in Selangor and Penang, subsidized access to design tools, and industry partnerships.
Infineon's Kulim facility is targeting a substantial share of the global silicon carbide power market by the end of the decade, serving as a key node in the automotive electrification supply chain. Sikh Shamsul Ibrahim introduced the New Incentive Framework, which provides targeted support for investments that create skilled jobs, strengthen local supply chain linkages, and contribute to long-term economic complexity. This framework includes tailored support for advanced packaging, IC design, wafer-level processes, and equipment manufacturing.
Malaysia is also enhancing its domestic supplier ecosystem through structured supplier development programs like the Infineon Vendor Development Programme, helping local small and medium enterprises upgrade capabilities and integrate into global supply chains. 'We want Malaysian companies to be more than vendors. We want them to be partners in the design and delivery of the technologies that the next decade of this industry will rely on,' he added.
Geopolitical developments, including export controls, tariff regimes, and investment screening, are expected to continue shaping the semiconductor industry over the next decade as companies build greater flexibility into their supply chains. Sikh Shamsul Ibrahim noted that energy is becoming increasingly important in semiconductor investment decisions as AI-optimized data centers and semiconductor manufacturing drive higher electricity demand globally.
'Access to stable, competitively priced, and increasingly green energy is becoming a primary site-selection determinant. STMicroelectronics' long-term solar power purchase agreement in Johor and Sarawak's expansion at Sama Jaya are leading indicators. Together with the Johor-Singapore Special Economic Zone, they are extending Malaysia's semiconductor footprint,' he said.