According to a report from Wall Street Journal, Alphabet CFO Ruth Porat announced in a statement on May 30 that Google has committed to investing USD 2 billion in Malaysia. The investment includes building its first data center, expanding Google Cloud, and further developing artificial intelligence (AI).

Porat highlighted that this will be Google’s largest investment project in Malaysia. Google estimates that this investment will contribute over USD 3.2 billion to Malaysia’s GDP and create 26,500 jobs by 2030.

As per a report from Bloomberg, Google stated that in addition to developing cloud computing services, it will also support AI literacy programs for students and educators.

In its earnings call in April, Porat mentioned that the significant year-over-year increase in capital expenditures over recent quarters reflects Alphabet’s confidence in the potential of AI. She projected that the quarterly capital expenditures for the second to fourth quarters of this year would be comparable to or slightly higher than those in the first quarter.

On May 2, Microsoft Corp. announced that it will invest USD 2.2 billion in Malaysia over the next four years to support the country’s digital transformation. The investment projects include developing digital infrastructure, creating AI skill opportunities, establishing a National AI Excellence Center, and enhancing Malaysia’s cybersecurity capabilities.

Earlier this week, Malaysian Prime Minister Anwar Ibrahim announced the National Semiconductor Strategy, which includes providing at least USD 5.3 billion in financial support and training 60,000 semiconductor engineers, aiming to make Malaysia a global chip hub.

Amidst the U.S.-China rivalry and other geopolitical tensions, global companies are seeking to diversify their supply chains. Facing competition between the U.S. and China, Malaysia is reportedly keen to maintain a neutral position in the semiconductor supply chain landscape. According to the Malaysian Investment Development Authority (MIDA), the country currently provides 13% of global testing and packaging.

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• [News] Malaysia’s Major Investment Aims to Establish Global Chip Hub
• [News] Overseas Expansion of Testing and Packaging Facilities – Japan, Malaysia, and Singapore Emerge as Top Choices

(Photo credit: Google)

According to a report from Reuters, Malaysian Prime Minister Anwar Ibrahim announced the National Semiconductor Strategy on May 28th, which includes providing at least USD 5.3 billion in financial support and training 60,000 semiconductor engineers, aiming to make Malaysia a global chip hub.

Over the next 5 to 10 years, at least MYR 25 billion (roughly USD 5.33 billion) will be allocated to cultivate chip talent and strengthen local businesses, with funding from Malaysia’s sovereign wealth funds such as Khazanah Nasional.

As per the semiconductor strategy, Malaysia plans to train 60,000 talents covering all aspects of chip manufacturing, including IC design, packaging, and testing. Universities and enterprises will participate in the training, and the government will also support local engineers in engaging in chip design IP.

Prime Minister Anwar revealed that Malaysia intends to establish at least 10 local  companies in design and advanced packaging for chips. If Malaysia wants to attract investment from global chip giants, cultivating more local semiconductor talent is crucial, especially as the country aims to enhance its advanced chip manufacturing capabilities.

The Malaysian government aims to attract at least MYR 500 billion (roughly USD 106.5 billion) in funds through domestic direct investment (DDI) and foreign direct investment (FDI) into fields such as chip design, advanced packaging, and manufacturing equipment.

Amidst the U.S.-China rivalry and other geopolitical tensions, global companies are seeking to diversify their supply chains. Facing competition between the U.S. and China, Malaysia is reportedly keen to maintain a neutral position in the semiconductor supply chain landscape.

Malaysia began engaging in the semiconductor industry over 50 years ago. According to the Malaysian Investment Development Authority (MIDA), the country currently provides 13% of global testing and packaging.

In December 2021, U.S. chip giant Intel announced an investment of over USD 7 billion to build a chip packaging and testing plant in Malaysia, expected to start production this year. Last year, German semiconductor giant Infineon announced an investment of EUR 5 billion to establish the world’s largest 200mm silicon carbide power chip plant in Malaysia over the next five years.

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• [News] Overseas Expansion of Testing and Packaging Facilities – Japan, Malaysia, and Singapore Emerge as Top Choices
• [News] Nikkei Highlights Japan’s Chip Subsidies Exceeding GDP Ratio of US, Germany, and France

(Photo credit: ASE Group)

As the global semiconductor landscape undergoes restructuring, major packaging and testing companies are actively establishing overseas advanced packaging capacities. According to a report from Commercial Times, semiconductor industry sources have indicated that, in terms of the clustering effect within the semiconductor industry, the primary targets currently include Japan, Malaysia, and Singapore.

Industry sources cited by the same report have pointed out that the global top ten packaging and testing companies are dominated by Taiwan, China, and the United States. Taiwan holds the lead with five industry giants including ASE Group, Powertech Technology, King Yuan Electronics CO. (KYEC), Chipbond Technology, ChipMos and Sigurd.

China boasts four key players such as Jiangsu Changjiang Electronics Technology Co., Tongfu Microelectronics, and Huatian Technology Co. Meanwhile, the United States is represented by Amkor, the world’s second-largest in scale. Japan’s pursuit of rebuilding the packaging and testing industry through a foundry model and seeking support from Taiwanese companies can be seen as a logical progression.

Given that nine out of the top ten packaging and testing companies are located in the Asia-Pacific region, the strategic positioning in Asia is particularly notable, with Japan, Malaysia, and Singapore all striving to make their mark.

Industry sources cited by the same report point out that Malaysia has been developing its semiconductor industry for decades, with Penang being a prominent semiconductor hub. Not only does Penang boast technological advantages, but it is also dubbed the “Silicon Valley of the East.”

As companies like TSMC, Samsung, and Intel expand their fabs to locations such as the United States and Europe, the downstream semiconductor testing and packaging activities are gradually forming clusters in Malaysia. This includes ASE Group’s significant investment in building a new testing and packaging facility in Penang, scheduled for completion in 2025.

Intel is also planning to establish advanced packaging facilities in both Penang and Kedah. Additionally, Texas Instruments from the United States has announced plans to build semiconductor testing and packaging facilities in Kuala Lumpur and Malacca.

While Malaysia’s testing and packaging sector has become a hub, industry sources cited by the report point out that despite many countries aggressively building their semiconductor industry chains, Japan is seen as the country, outside of Taiwan, with the most comprehensive semiconductor supply chain in the future, due to factors such as cultural traits, industrial development experience, geographical proximity to Taiwan, and long-standing close cooperation.

TrendForce has previously reported that Japan’s resurgence in the semiconductor arena is palpable, with the Ministry of Economy, Trade, and Industry fostering multi-faceted collaborations with the private sector. With a favorable exchange rate policy aiding factory construction and investments, the future looks bright for exports.

With Japan rapidly catching up in development, it becomes necessary for companies like ASE Group to strengthen their presence in Japan. The sources cited by the report are optimistic that Taiwanese-owned testing and packaging facilities may follow suit.

Recently, Powertech Technology Inc., Taiwan’s testing and packaging company, expressed openness to exploring opportunities in Japan, including seeking subsidies from the Japanese government, following the model set by TSMC.

Singapore is also actively strengthening its semiconductor industry chain. Per official Singaporean data, out of the 15 world-class chip design companies, 9 have established bases in Singapore. Additionally, there are 14 semiconductor fabs and 20 semiconductor assembly and testing facilities.

Coupled with the nearby established backend testing clusters in Malaysia, if Singapore constructs a more complete industry chain, it is poised to attract even more world-class testing and packaging companies to establish their presence there.

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• [News] Nikkei Highlights Japan’s Chip Subsidies Exceeding GDP Ratio of US, Germany, and France
• [News] ASE Expands Production at Kaohsiung Plant, Focusing on Advanced Packaging for AI Chips

An increasing number of Chinese semiconductor design companies are seeking collaboration with testing and packaging facilities in Malaysia to carry out advanced chip packaging. According to Reuters’ report, this move aims to hedge the risk of potential expanded U.S. restrictions on the Chinese semiconductor industry.

As there is currently only one non-U.S. testing and packaging provider in Malaysia with advanced capabilities, namely ASE Technology Holding Co., a Taiwanese semiconductor packaging and testing firm, industry sources believe that ASE is likely to become the top choice for orders from Chinese enterprises.

Previously, the U.S. has imposed controls on China’s advanced semiconductor manufacturing processes and access to high-performance chips from major companies like NVIDIA. However, advanced packaging has not yet fallen within the restricted scope.

Two anonymous sources reportedly revealed that some of the Chinese businesses are showing interest in advanced chip packaging services. Despite the fact that the chip packaging sector has not yet faced export controls from the U.S., concerns are rising among businesses due to its involvement in sophisticated technology, fearing that it might be targeted for curbs on exports in the future.

Reuters’ report also indicates that due to the relatively affordable investment costs in Malaysia and the availability of experienced workforce and sophisticated equipment, an increasing number of Chinese chip design firms are seeking Malaysian Firms to carry out advanced chip packaging activities, including graphic processing units (GPUs).

Insiders have informed Reuters that the related contracts only involve packaging and do not violate any restrictions imposed by the U.S.. Additionally, they clarified that wafer manufacturing is not included in these contracts.

Two of the sources mentioned that some contracts have already been agreed. However, these insiders prefer not to disclose the names of the involved companies.

Meanwhile, according to a report from Taiwan’s Economic Daily News, when observing the global landscape of advanced packaging, in addition to TSMC, there are integrated device manufacturers (IDMs) like Intel and Samsung, as well as outsourcing semiconductor assembly and test (OSAT) companies like ASE Technology, Amkor, and others that possess advanced packaging capabilities. Among them, only ASE Technology, Amkor, and Intel have production capacity in Malaysia.

Reportedly, industry analysts predict that Chinese companies seeking advanced packaging support in Malaysia, due to geopolitical considerations, are likely to avoid American companies such as Intel and Amkor. Given that ASE is not an American company and can provide high-end packaging services, it is expected to be the preferred choice for Chinese companies.

ASE has previously stated that it will continue to invest in advanced packaging for AI, expecting the performance of advanced packaging to double next year compared to this year.

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• [News] Bypassing U.S. Restrictions? CXMT Showcases GAA Technology for 3nm Chips
• Malaysia: Rising Global Hub for Semiconductor Backend Testing and Packaging in Supply Chain Shift

(Photo credit: ASE Holdings)

A senior government official in Malaysia has stated that the country will prioritize attracting investments in high-tech industries such as semiconductor and electric vehicles to solidify its status as a manufacturing hub in Southeast Asia within the global supply chain.

Sikh Shamsul Ibrahim, the Senior Executive Director of the Malaysian Investment Development Authority (MIDA), made this announcement during the Kuala Lumpur Economic Forum. He emphasized that in the face of ongoing trade wars and geopolitical tensions, Malaysia’s goal is to leverage the realignment and redistribution of global supply chains.

Ibrahim further stated that they are placing a strong emphasis on enhancing supply chain resilience and fostering closer collaborations with their trade partners. He also pointed out that they are actively exploring priority sectors with a particular focus on high-growth industries, including semiconductors, electric vehicles, and renewable energy.

In addition, Sikh Shamsul Ibrahim highlighted the government’s objective to introduce tiered corporate tax incentive measures, as per the 2024 budget plan, to attract investments in high-value and high-growth industries.

In September of this year, Malaysia unveiled a new industrial master plan that includes a $19.91 billion investment over seven years to advance its manufacturing capabilities. Key sectors in this initiative encompass electronics, chemicals, and electric vehicles, with the country also aiming to create 3.3 million new job opportunities.

(Image credit: Pixabay)