World Bank Malaysia lead economist Dr. Apurva Sanghi has issued a caution, stating that Malaysia’s semiconductor industry, although resilient despite escalating tensions between the US and China, still lags in advanced pattern development and Malaysia’s integrated circuit (IC) design remains negligible, at the RAM Forum 2023.
Apurva emphasised that Malaysia’s semiconductor sector, which contributes nearly 25% of the country’s gross domestic product (GDP), continues to thrive and play a crucial role in the nation’s economic stability, according to The Edge Malaysia.
However, he also warned that the sector needs to ascend the value chain to ensure continued long-term benefits.
Apurva remarked, “The classic scenario is when the elephants fight, the philosophy is to scramble. But I think, for Malaysia, there is a noteworthy exception—a silver lining, and that is the semiconductor industry.”
He further noted that, “The result of these elephants fighting is that semiconductor exports from Malaysia to both the US and China have increased. Malaysia, at least in the short term, is benefiting from the ongoing conflict.”
Nonetheless, Apurva cautioned about a more profound concern looming over Malaysia’s semiconductor sector.
While Malaysia boasts an impressive 8% share of the global semiconductor market, it lags significantly in advanced pattern development, with its IC design representing a mere 0.07% of the semiconductor industry.
“Malaysia has yet to shift the semiconductor value chain from low to high. It remains primarily focused on assembly and testing, without making significant strides in design and development,” he remarked.
He added that “Addressing these long-term structural issues is imperative for the semiconductor industry to continue reaping benefits.”
