Budget 2027: Local Semiconductor Firms Must Move Up Value Chain -- Tengku Zafrul

By Karina Imran

KUALA LUMPUR, Oct 14 (Bernama) -- Local semiconductor companies must translate Budget 2027's allocation into greater participation in higher-value activities such as integrated circuit (IC) design, as Malaysia seeks to strengthen its position in the global semiconductor supply chain, said Tengku Datuk Seri Zafrul Abdul Aziz.

Speaking on Bernama TV’s The Nation programme, the Malaysian Investment Development Authority (MIDA) chairman said Malaysia has developed a mature semiconductor ecosystem over more than five decades but needs to move beyond its traditional strengths in assembly and testing to capture greater value from the industry.

“We have Malaysian companies that are already global champions and they are plugged into the global value chain, but we need to see more. The ecosystem is quite mature but we need to strengthen the way we are in that value chain,” he said in the interview on Budget 2027 aired today.

Under Budget 2027, Khazanah Nasional Bhd and the Kumpulan Wang Persaraan (Diperbadankan) (KWAP) will invest RM1.2 billion to support local semiconductor companies in moving into higher-value segments of the industry.

The budget also provides for a RM100 million Strategic Investment Fund to be established by Khazanah Nasional Bhd and InvestPenang to support early-stage semiconductor and advanced manufacturing companies.

Tengku Zafrul said the measures would help Malaysian companies strengthen their capabilities and move further up the value chain.

He said investments should generate wider economic spillovers by strengthening local supply chains and creating opportunities for domestic businesses.

“If we move up this value chain, we need to make sure that Malaysia really looks at opportunities (such as) how we can then invest more in research and development (R&D) and innovation," he said. 

At the same time, Tengku Zafrul said, the government must focus not only on attracting investments but also on ensuring that approved projects are realised within a reasonable timeframe.

He said the process of securing approvals from local councils and relevant government agencies remain an important consideration for investors, with the speed of implementation varying across sectors.

“Investment projects, particularly in manufacturing, could take about two years from groundbreaking to the completion of factories, depending on the industry,” he noted. 

On wages, he opined that companies should translate productivity gains into higher wages for employees to ensure that economic growth delivers better livelihoods for Malaysians.

“I'm definitely a proponent of ensuring that wages must increase in line with productivity,” he said, adding that companies that recorded higher profits through improved efficiency and productivity should share those gains with their employees.

-- BERNAMA