Malaysia's Silicon Valley ambitions spark worry

Malaysia is making great strides in its effort to become a major player in the global semiconductor industry as it looks to capitalise on a surge in demand driven by the Al explosion but analysts warn it faces headwinds. Malaysia’s signing of a major deal with British chip giant Arm this month was the latest step towards achieving the country's goal of producing its own top-end chips in the next five to seven years.

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But experts say internal constraints such as a talent crunch, funding problems and other supply chain gaps are key hurdles the country must overcome if it is to compete with top regional industry giants such as Taiwan, South Korea and Japan.

Shafiq Kadir, an equity analyst at CGS Inter-national, said local integrated circuit (IC) design houses had narrow access to large capital, and lacked a strong track record and an established pool of experienced engineers. “We still lack sufficient talent, as our tertiary education is less prepared in producing graduates with the right skill set,” Shafiq said.

MalaysiaSemiconductor Industry Association president Wong Siew Hai also said there was a “shortage of those suitable for the specific experience and skill sets that we are looking for.”

Although there are experienced Malaysians who have worked with multinational firms, many of them chose to work abroad for better pay and opportunities, among other factors, Wong said, “We lose an average I5 percent of our talent in the semiconductor industry every year to brain drain,” he said.