Micron has announced a significant expansion in Penang, Malaysia on October 13th. Micron had previously invested $1 billion in Penang and plans to invest another $1 billion over the coming years for the construction and equipping of a state-of-the-art assembly and testing facility. This expansion is located in Batu Kawan Industrial Park (BKIP), will increase the total factory area to 1.5 million square feet.

The expansion positions Micron Malaysia to boost production and further enhance its assembly and testing capabilities, allowing it to meet the growing demand for transformative technologies like NAND, PC DRAM, and SSD modules driven by artificial intelligence, autonomous vehicles, and electric cars.

“This expansion also reflects our unwavering dedication to advancing semiconductor development and manufacturing excellence,” Micron Malaysia vice-president and country manager Amarjit Singh Sandhu addressed, “The official opening of our new manufacturing facility in Batu Kawan also strengthens Micron’s global manufacturing footprint, enabling us to deliver quality products to our customers on time, with reduced cycle time and at scale.”

Malaysia’s Semiconductor Potential

Malaysia stands out for its strong education standards and shares the British legal system with just Singapore in ASEAN, making it a competitive choice for companies. The language proficiency of Malaysians in English, Mandarin, and Malay enables smooth global communication. Besides, Malaysia’s two top-tier ports, Port Klang and Port of Tanjung Pelepas, enhance its global accessibility.

Penang is a semiconductor hub, often likened to the “Silicon Valley of the East,” with a focus on electronics, computers, and mobile phone chips. The growing demand for automotive chips and green energy technologies has attracted numerous companies, leading to facility expansions. Major players like Intel, Texas Instruments, Infineon, Bosch Group, and ASE Technology Holding have invested billions in Malaysia’s semiconductor industry, marking it as a growing center for backend testing and packaging.

Current State of Malaysia’s Semiconductor Industry

Apart from Micron, which opened their second plant in Penang last weekend, Malaysia has already attracted significant attention to establish wafer fabrication plants in the United States and other regions.

In the past two years, Intel invested $6.46 billion in advanced packaging capabilities in Penang and Kedah. Texas Instruments embarked on building semiconductor testing and packaging plants in Kuala Lumpur and Malacca, with a $2.7 billion investment. Infineon allocated $5.45 billion for expanding facilities and entering the electric vehicle sector, while Bosch Group is investing $358 million to fortify its semiconductor supply chain in Penang. ASE Technology Holding also initiated the construction of a new testing facility in Penang.

The surge of semiconductor giants underscores Malaysia’s pivotal role in the industry. This transformation aligns with the unique production strengths of Southeast Asian nations, reshaping supply chains and redefining production centers—a focus and challenge for global companies.

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• Malaysia: Rising Global Hub for Semiconductor Backend Testing and Packaging in Supply Chain Shift

According to a report by Taiwan’s Central News Agency, Tien Wu, CEO of the semiconductor packaging and testing giant ASE Group, believes that the semiconductor industry is experiencing ongoing inventory adjustments, with uncertainties remaining in the global economy. However, he maintains a positive long-term outlook, asserting that semiconductor demand remains robust. Wu also revealed that ASE Group is expanding its operations in Penang, Malaysia, with expectations of doubling its revenue to $750 million within 2 to 3 years.

The 2023 Semicon Taiwan is set to begin on the 6th, and when discussing the economic outlook for the second half of the year, Wu noted that the semiconductor industry is well-aware of the current inventory corrections and the lingering global economic uncertainties. Nevertheless, he maintains relative optimism about the industry’s long-term development.

Regarding the company’s involvement in advanced packaging, such as Chip-on-Wafer-on-Substrate (CoWoS), Wu mentioned that ASE Group offers corresponding services in this field. When asked about the contribution of artificial intelligence (AI) applications and advanced packaging to the company’s portfolio, he stated that it’s currently challenging to evaluate. However, he emphasized that AI is a significant focus for ASE Group.

In response to inquiries about whether customers have requested ASE Group to shift a portion of its production capacity outside of Taiwan (Taiwan+1) to mitigate risks, Wu clarified that there have been no specific requests from customers regarding proportional capacity transfers or deadlines for such transfers. Production capacity adjustments are primarily made flexibly, contingent on the readiness of the local supply chain. He emphasized that customer discussions regarding capacity adjustments are rational and logical.

Wu stressed that customer demands are being met in accordance with logic and regulatory considerations. In response to urgent service needs, ASE Group is expanding its operations in locations outside Taiwan. However, this does not signify a complete relocation of Taiwanese production capacity, nor does it indicate that customers have mandated such a shift.

He disclosed that ASE Group’s expansion is taking place in Penang, Malaysia, with the first five-story building expected to be completed by July next year. Plans are in place for a second building by 2025. Currently, ASE Group’s Penang facility generates approximately $350 million in annual revenue. It is projected that within 2 to 3 years, the facility’s revenue will double to $750 million.

In addition to its California presence, Wu highlighted that the ASE Group subsidiary, ISE Labs, has expanded its capacity in San Jose to meet customer demands. He emphasized that ASE Group continues to expand its operations in Taiwan as well, including locations in Zhongli, Kaohsiung, Taichung’s Tanzi.

(Photo credit: ASE)