Governments around the world are pledging billions of dollars in incentives to transform themselves into chipmaking hubs, as semiconductors become an increasingly strategic product critical to consumer electronics, AI, and other cutting-edge technologies.
Malaysia is no different. The Southeast Asian country, which already has an established semiconductor industry, is making a play to attract even more investment from both sides of the geopolitical divide.
In a keynote address at the Semicon Southeast Asia conference in Kuala Lumpur, Malaysia Prime Minister Anwar Ibrahim touted his country’s advantages.
“I offer our nation as the most neutral and non-aligned location for semiconductor production, to help build a more secure and resilient global semiconductor supply chain,” Anwar said on Tuesday.
He added that Malaysia hopes to attract least 500 billion Malaysian ringgit ($107 billion) in new investments through a new National Semiconductor Strategy. The new initiative would train 60,000 high-skilled local engineers, and establish at least 10 local semiconductors firms in design and advanced packaging with revenue between 1 billion and 4.7 billion ringgit ($212.7 million to $1 billion). Anwar did not specify a timeline for the targets to be met. Malaysia’s government will also offer 25 billion ringgit ($5.32 billion) in incentives to foster a domestic semiconductor industry.
Anward had previously announced the construction of an integrated circuit design park in Selangor state, which when complete would be the biggest in Southeast Asia.
The semiconductor industry is quickly becoming polarized between the U.S. and China. Washington is trying to shift chip supply chains to rely less on China, both by trying to get companies to move some chip production to the U.S. or to allies like Japan. It’s also trying to limit exports of advanced chips and chipmaking equipment to China.
Beijing, in turn, is increasingly leaning on its chip companies to rely less on foreign suppliers, and recently pledged $47.5 billion in investment to support local manufacturers.
Malaysia isn’t a newcomer to the semiconductor industry. The country is responsible for 13% of chip packaging, assembly, and testing services globally, according to data from the government. (Assembly and packaging are the final steps of the semiconductor manufacturing process). Global chipmakers like Intel and Germany’s Infineon operate facilities in the country.
Anwar has previously played up Malaysia’s ambition to be a neutral territory between the U.S. and China. In an interview with Fortune editor-in-chief Alyson Shontell last year, Anwar explained to U.S. diplomats that geopolitics is not a “zero-sum game.” Then, in February, Anwar said he wanted to maintain “good and stable relations with the U.S. [while] looking at China as an important ally” in comments to the Financial Times.
