Malaysia Attracts Semiconductor Investments

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Malaysia is an Attractive Destination for Investment

Written by Sharun Anthony for IIR News Intelligence (Sugar Land, Texas)

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Summary

From being a global leader in back-end chip processing and a significant contributor in the global semiconductor supply chain, Malaysia is progressing toward becoming an overall high-tech powerhouse.

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Malaysia's Semiconductor Projects

Industrial Info Resources is tracking 33 active capital projects in Malaysia, worth about US$20 billion, that are aimed at manufacturing semiconductors and related items. Subscribers to the Global Market Intelligence (GMI) Project Database can view a full list of project reports.

By state, Pulau Pinang is the biggest driver of investment, with a total spend pipeline of more than US$48 billion across 17 projects and capturing a market share of 43%. It is followed by Keddah with more than US$7 billion and Kuala Lumpur with more than US$2 billion. Other states with significant investments include Perak, Negeri Sembilan and Kelantan.

More than 44% of the overall investment is geared toward grassroot projects, while 43% is for plant expansions. More than half of the spend is in the planning phase, while 46% of the investment is already under construction.

With an overall spend of more than US$14 billion, Infineon Technologies AG and Intel Corporation are the top players in the market. They hold a combined market share of around 74%. Intel is investing more than US$7 billion in a grassroot semiconductor manufacturing facility in Pulau Pinang. The project kicked off in December 2021 and is likely to reach completion by the end of 2026. Subscribers can view the project report.

As Malaysia transitions from "finished in" to "made by," the future trajectory of these projects will likely mirror the nation's broader semiconductor growth. However, it remains to be seen how much this vision actually comes to fruition.

Malaysia's Strong Standing in Semiconductors, Tech

From being a global leader in back-end chip processing and a significant contributor to the global semiconductor supply chain, Malaysia is progressing toward becoming an overall high-tech powerhouse. Currently handling 13% of global chip assembly, testing and packaging (ATP), according to the Malaysian Investment Development Authority, Malaysia intends to become a key node in the worldwide semiconductor landscape--leveraging government support, electric vehicle (EV) and artificial intelligence (AI) industry growth, digital infrastructure and a strategic location amid trade turfs.

Renowned for its well-established digital infrastructure, Malaysia has more than 500 industrial parks, according to reporting from Plastic and Rubber Asia, and a seamless cross-border network, making the country an export-driven economy. According to a recent report from trade-data provider OEC, the country's exports rose 19.6% to MYR$147 billion (US$37 billion)) between January 2025 and January 2026, with the top exports (32%) being integrated circuits (MYR$48.4 billion) (US$12 billion). The U.S., Singapore and China were the top Malaysian importers as of January 2026, according to the OEC.

The global boom in generative AI and electric vehicles (EVs) have driven notable investments in Malaysia's semiconductor industry, especially in data center buildouts and advanced chip processing facilities. Pivoting from traditional chip assembling, the nation is now evolving to both advanced front-end and back-end technologies such as integrated circuit (IC) design, wafer fabrication, system-in-package (SiP) and silicon photonics that are key to AI-driven chipmaking.

Rather than competing with global giants like Taiwan Semiconductor Manufacturing Company Limited, Malaysia is targeting legacy silicon carbide nodes such as 7-nanometer (nm) (high-end AI chips) and 28-nm (mature nodes for heavy industrial use) to carve out its niche in the global semiconductor landscape. This has led tech giants such as Google, NVIDIA and Infineon to invest heavily in Malaysia to expand data centers and wafer fabs, targeting power semiconductors for EVs and AI-specialized chips.

Geopolitical tensions, such as the U.S.-China chip wars, have led companies to move their operations to Malaysia to conduct free-flowing business while remaining neutral. Firms seeking to de-risk their supply chains, primarily through the China+1 strategy, are working toward increasing capital expenditures (capex) in the nation.

Furthermore, favorable government policies have helped in securing capital expenditures in Malaysia. For instance, the 2024 National Semiconductor Strategy (NSS) has been instrumental in aiding Malaysia's transition from back-end assembly role to front-end, high-value wafer fabrication. This multi-phased program, which has an overall investment plan of MYR$500 billion (US$107 billion), seeks to support advanced packaging, upskill domestic talent and develop local industrial hubs. Furthermore, following the success of its first IC park, Malaysia launched IC Design Park 2 last year, marking a new milestone in the nation's semiconductor development. With these strategies, Malaysia aims to raise its share of high-tech manufacturing exports from the existing 5% to 6% by 2030.

Key Takeaways

• Malaysia is progressing toward becoming an overall high-tech powerhouse.
• Industrial Info Resources is tracking 33 active capital projects in Malaysia, worth about US$20 billion, that are aimed at manufacturing semiconductors and related items.
• Malaysia aims to raise its global share of high-tech manufacturing exports from 5% to 6% by 2030.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).