Malaysia Emerges as Attractive Destination for Semiconductor Manufacturing Amid Global Trade Tensions

Malaysia remains an attractive destination for semiconductor manufacturing globally due to its committed investments and neutral stance amid global trade tensions. The National Semiconductor Strategy has attracted RM63bil in investments, with 10 local firms aimed to have revenues exceeding US$1bil and 100 companies with revenues exceeding RM1bil. CIMB Research's top picks in the sector include Inari Amertron Bhd, MPI, and ViTrox.

Malaysia has emerged as a key player in the global semiconductor industry, driven by significant investments and a strategic neutral stance amidst ongoing trade tensions. According to CIMB Research, the country's committed investments and alignment with ASEAN have positioned Malaysia as a vital node in the global chip supply chain [1].

The National Semiconductor Strategy (NSS), launched in May 2024, aims to shift Malaysia from a "Made in Malaysia" model to a "Made by Malaysia" one. This strategy focuses on strengthening local capabilities in integrated circuit (IC) design, research and development, advanced packaging, and nurturing homegrown champions across the value chain [1].

Since its launch, the NSS has attracted RM63bil in investments, of which RM58bil was foreign direct investment and RM5.2bil domestic direct investment. This underscores rising investor confidence in Malaysia's semiconductor ecosystem [1].

Malaysia aims to develop 10 local semiconductor firms with revenues exceeding US$1bil and 100 companies with revenues exceeding RM1bil. The government has identified 13 Malaysian-based companies across the semiconductor value chain as key beneficiaries, including Carsem (M) Sdn Bhd, Malaysian Pacific Industries Bhd (MPI), Inari Amertron Bhd, Pentamaster Corp Bhd, Vitrox Corp Bhd, and Kellington Group Bhd [1].

CIMB Research's top picks in the Malaysian outsourced semiconductor assembly and test sector are Inari Amertron Bhd and MPI. ViTrox is also highlighted for exposure to the automated test equipment sector [1].

The new AI Action Plan rolled out in the United States has significant implications for the semiconductor industry. Taiwan Semiconductor Manufacturing (TSM), a key player in the global chipmaking landscape, stands to benefit from this plan. With increased funding allocated to data center infrastructure and artificial intelligence development, TSM could see a significant boost in its operations and stock price [2].

While the AI Action Plan has favored TSM, analysts remain optimistic about the company's future prospects. Charles Shi from Needham & Company has a Buy rating on TSM with a valuation target of $270 per share, suggesting a potential 10.2% upside from current levels [2].

In conclusion, Malaysia's semiconductor industry is poised for growth, driven by strategic investments and a supportive government strategy. Meanwhile, global trends and policies, such as the AI Action Plan, are creating new opportunities for key players like TSM.

References:
[1] https://www.thestar.com.my/business/business-news/2025/07/29/malaysia-vital-to-global-semiconductor-industry
[2] https://www.marketbeat.com/originals/taiwan-semiconductor-could-boom-on-this-ai-action-plan/