Malaysia: Malaysia's outsourced semiconductor assembly and test (OSAT) industry is on the verge of significant growth, driven by the expanding photonics sector. The market is projected to reach approximately US$4.6 billion by 2030, fueled by increasing demand for optical networking infrastructure.
According to BERNAMA News Agency, Kenanga Investment Bank Bhd (Kenanga IB) highlighted in a research note that the integration of photonics in data communications, especially within artificial intelligence (AI) data center networking, is gradually enhancing the value of high-precision assembly, reliability qualification, and testing. For Malaysia, the photonics segment is aligning more closely with OSAT functions, emphasizing high-precision assembly and reliability over component performance alone.
Kenanga IB observed that as the optical module ecosystem continues to outsource assembly and testing activities, Malaysian OSAT players could participate in capacity expansion. This is likely where customers focus on quality systems, yield discipline, traceability, and reliability screening. Key factors to watch include the scalability of photonics packaging flows for outsourcing and the willingness of module owners to qualify Southeast Asian partners for complex tasks like fibre attachment, advanced packaging, and optical testing.
Based on LightCounting's forecast, if the OSAT share of the datacom market reaches 10 percent by 2025, the sector could grow from US$1.7 billion in 2025 to US$4.6 billion by 2030, reflecting a compound annual growth rate (CAGR) of 22 percent. LightCounting is a market research firm specializing in the optical communications and photonics industry.
Additionally, Kenanga IB noted that automation players are strategically positioned to address manufacturing challenges in the photonics industry, which are increasingly suited for automation. This includes areas like micro-alignment, automated optical inspection (AOI), and logistics around burn-in and test integration, supporting a favorable medium-term setup for integrators offering comprehensive solutions encompassing motion, vision, handling, testing, and traceability.