Malaysia stands at a defining moment in its technological journey. We have long been a trusted hub for global semiconductor giants, with semiconductor exports exceeding RM500 billion annually.

Yet, despite this impressive figure, the sector’s contribution to GDP remains disproportionately low, hovering below 7 per cent. This paradox highlights a critical truth – we are essential to the global supply chain but we are not yet in control of our own destiny.

For decades, Malaysia has played a pivotal yet supporting role in the global semiconductor industry. Our skilled workforce and world-class manufacturing facilities have enabled multinational corporations to thrive on our soil.

However, our local industry players remain largely disconnected from the core global semiconductor ecosystem. While we facilitate the production of high-value semiconductor components, we lack market access, industry integration and strong demand for locally designed products. The result? Our indigenous companies struggle to compete, innovate and sustain long-term growth.

This is not due to a lack of talent or capability – it is a structural issue. We do not yet control the intellectual property (IP), system integration or the final products that drive consumer and industrial demand. As a result, Malaysia remains a highly skilled assembler rather than an independent creator.

If we are to break free from this cycle, we must move beyond merely supplying components and into creating our own branded end-consumer products. This shift will not only establish Malaysia as an innovation leader but will also drive demand for local semiconductor and electronics businesses, creating a self-sustaining ecosystem.

Why Settle for Being a Component Supplier When We Can Lead in End-Consumer Products?

The key to long-term resilience is ownership and market creation. While deepening partnerships in chip design is a necessary step, it is not enough. What Malaysia truly needs is a more ambitious vision – one that prioritises the development of our own branded consumer electronics and industrial products that drive sustained local and global demand.

Demand drives innovation. If Malaysia produces its own smart devices, electric vehicles, industrial automation solutions and IoT systems, our local semiconductor designers will have a natural market. This will strengthen the entire ecosystem, from IC design to chip fabrication, assembly, and final product manufacturing.

Other nations have shown us the way:

South Korea built its semiconductor dominance by nurturing national brands like Samsung and LG, which propelled local chip designers onto the world stage.

Taiwan did not merely manufacture chips; it specialised in wafer fabrication, making itself indispensable to the global semiconductor supply chain. Chip design is part of their value-added services.

Malaysia, too, has the talent, infrastructure and strategic position to rise as a leader in semiconductor technology. What we need now is a bold, coordinated effort to move beyond contract manufacturing and into end-product innovation.

Malaysia’s Market Challenge: Why We Struggle to Scale Globally

One of the greatest challenges facing Malaysian semiconductor and electronics companies is that they are not fully integrated into the global ecosystem. Unlike industry leaders in Taiwan, South Korea and China, our local players struggle with:

1. Limited market access: Without strong local demand for chips and components, Malaysia’s design firms lack the volume required to be globally competitive.
2. Dependence on foreign players: Most semiconductor exports come from multinational companies based in Malaysia, rather than from Malaysian-owned firms.
3. Lack of brand ownership: Malaysia does not have strong local brands in consumer electronics, automotive or industrial technology that can drive demand for locally made chips.
4. Absence of a national champion: Unlike Samsung (South Korea) or TSMC (Taiwan), Malaysia does not have a flagship semiconductor company that dominates a specific niche.

To overcome these barriers, Malaysia must focus on building its own branded end-products, ensuring that local chip designers, electronics manufacturers and component suppliers have a guaranteed demand base.

A Strategic Path Forward: ARM, RISC-V, and the Power of Choice

Our journey toward semiconductor sovereignty requires a clear technological strategy. Three key architectures define the modern chip industry:

1. x86 (CISC): Dominated by Intel and AMD, this architecture powers PCs and servers but is too proprietary and power-intensive for Malaysia to enter meaningfully.
2. ARM (RISC): The dominant choice for mobile and embedded systems, ARM’s energy-efficient design is a logical starting point for Malaysia’s ambitions. Licensing ARM’s IP allows us to design custom chips tailored to ASEAN’s unique consumer and industrial needs, from electric vehicles to smart cities.
3. RISC-V (Open-Source): A revolution in the making, RISC-V’s open-source model offers Malaysia a chance to develop independent chip designs without restrictive licensing fees. Although still maturing, it represents a long-term investment in technological sovereignty.

By leveraging ARM for rapid market entry and RISC-V for long-term independence, Malaysia can build a robust and self-sustaining semiconductor industry. ARM gives us speed; RISC-V gives us freedom. Together, they give Malaysia a seat at the table of technological giants.

A Call to Action: Building a Self-Sustaining Local Semiconductor Ecosystem

To transform this vision into reality, we need decisive leadership, policy alignment and strategic investment. Here is how Malaysia can take bold action:

Establish a Quadruple Helix National Semiconductor Task Force:

This task force must unite industry players, government agencies, academia and civil society to craft an agile 10-year semiconductor roadmap aimed at building a robust Malaysia-centric ecosystem. The goal is to integrate Malaysian players into the global value chain, creating a self-sustaining industry.

1. Strategic Investment in Malaysian Chip Design Firms:

The government should provide co-investment grants to local IC design companies developing ARM and RISC-V chips. For every ringgit these companies raise from private investors, the government should match it, following the model of successful tech incubators worldwide.

2. Accelerate Talent Development in Embedded Systems and AI:

By 2030, Malaysia should aim to train 10,000 engineers in chip design, embedded systems and AI-powered semiconductor applications through partnerships with ARM, RISC-V International, and leading academic institutions.

3. Develop Local Consumer Electronics and Industrial Products:

Malaysia’s semiconductor industry must be demand-driven. By prioritising the creation of Malaysian-made smart devices, EVs, and automation systems, we can ensure that local semiconductor firms have a thriving domestic market.

This Is Our Time to Lead

I write this not as a critic, but as a firm believer in Malaysia’s potential. Our people are resourceful, resilient and capable of extraordinary achievements. The transformation of Malaysia’s semiconductor industry is not just an economic imperative, it is a matter of national pride and future security.

We have spent decades as a trusted manufacturer for global companies. Now, it is time to be the innovators, the brand owners, and the industry leaders.

The world is changing rapidly. Technology is shaping the future of nations. Will Malaysia rise to the challenge and seize its rightful place as a leader in semiconductor innovation?

The answer lies in our hands. The time for bold decisions is now.

With an unwavering belief in Malaysia’s potential, a Malaysia dedicated to technological excellence and national progress.

"The best way to predict the future is to create it." – Peter Drucker & Abraham Lincoln

-- BERNAMA

Dr Saat Shukri Embong is the Acting President and Group Chief Executive Officer at MIMOS Berhad and has 30 years of experience in Malaysia’s semiconductor industry.