Malaysia is at a pivotal crossroads in its technological evolution. The recent launch of Malaysia’s Silicon Vision, a bold initiative unveiled by the Ministry of Economy, in collaboration with the architect behind the world’s most complex chips, signals a new era in semiconductor and AI chip manufacturing.

This event is not merely a product launch; it represents a strategic pivot toward building an end-to-end ecosystem that encompasses intellectual property (IP) creation, advanced integrated circuit (IC) design, and full-cycle manufacturing.

By owning the critical IP for AI innovation, Malaysia not only secures strategic control over its technological future but also positions itself to serve high-demand sectors such as data centres, autonomous vehicles, robotics, and healthcare.

The initiative reflects a radical reimagination of Malaysia’s potential, promising quality, cost efficiency, and an innovation-driven supply chain.

This new vision for Malaysia’s semiconductor landscape is underpinned by a comprehensive strategic framework detailed in the New Industrial Master Plan (NIMP) 2030.

NIMP 20230

The NIMP 2030 for the Electrical and Electronics Industry outlines bold missions and action plans aimed at moving the country up the value chain, from basic assembly and test operations to advanced R&D and system-on-chip (SoC) design.

The policy emphasises nurturing indigenous capabilities and establishing collaborative industrial clusters that can catalyse domestic innovation, ensuring that Malaysia captures more value locally rather than relying solely on foreign expertise.

The urgency to develop domestic capabilities is heightened by the evolving global trade landscape, particularly in light of the recent U.S. export controls on the AI Diffusion Framework that was announced on Jan 13.

These controls restrict the free flow of critical AI technologies, placing pressure on nations to seek alternative, homegrown solutions.

Against this backdrop, Malaysia’s push towards building its own AI chip infrastructure is not only a strategic response to external pressures but also a proactive move to diversify revenue streams and mitigate vulnerabilities inherent in heavy reliance on imported technology.

Trade data from 2023 provides deeper insight into Malaysia’s position within the regional semiconductor landscape.

While its semiconductor-manufacturing equipment trade with China (Exports: US$23.14m exports; Imports: US$58.73m) and the United States (Exports: US$117.23m; Imports: US$162.35m) remains modest compared to regional leaders like Singapore, Malaysia’s active engagement in both markets signal its potential for growth.

The country’s strong exports of IC and related components to China (US$13.28bn) and the United States (US$6.79bn), alongside significant imports from China (US$7.31bn) and the United States (US$4.79bn), further reinforce its role as a key player in the global electronics supply chain.

However, this also highlights a reliance on external markets, emphasising the urgent need to develop domestic capabilities and reduce dependency on foreign technology.

Beyond trade figures, the revenue distribution of majority Malaysia’s semiconductor and tech-related companies reveals a nuanced picture.

While these firms benefit from a diversified market presence across key regions such as Singapore, the United States, and China, a significant share of their earnings remains tied to external demand.

This reliance exposes them to global economic shifts and supply chain disruptions, underscoring the importance of strengthening local AI and semiconductor firms.

Homegrown AI firms

To mitigate these risks, Malaysia must accelerate efforts to cultivate and scale homegrown AI firms, ensuring that local players are not just participants in the supply chain but also innovators in chip design, fabrication, and AI-driven applications.

This requires targeted investments in research, talent development, and infrastructure, alongside stronger collaboration between the government, industry, and academia.

By fostering a dynamic AI ecosystem, Malaysia can reduce its dependency on foreign technology, create new revenue streams, and establish itself as a formidable player in the global AI and semiconductor landscape.

Ultimately, the convergence of Malaysia’s Silicon Vision, the strategic direction outlined in NIMP 2030, and the current global trade challenges, such as US export controls, forms a compelling case for a radical reimagination of the country’s semiconductor industry.

By accelerating local R&D, fostering public–private collaborations, and developing specialized industrial clusters, Malaysia can transition from being a key player in assembly and test operations to a leader in high-value semiconductor and AI chip design and manufacturing.

In doing so, Malaysia will not only bolster its technological sovereignty but also chart a resilient and diversified economic future, a future truly “Made in Malaysia”.

-- BERNAMA

Ahmad Faiz Yazid is a graduate of Bachelor of Economics from Universiti Malaya