Malaysia’s Penang looks ‘50 years ahead’ to revive Silicon Valley of the East

Penang’s determination to move up the semiconductor value chain signals a new era for Malaysia’s tech sector amid growing global challenges

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Tanjung Tokong on Penang Island. A 275-kilovolt transmission line that spans the Penang Strait, connecting Butterworth to the island, is being constructed. Photo: Shutterstock

CNA

Published: 1:50pm, 16 Sep 2024Updated: 3:42pm, 25 Sep 2024

Malaysia’s Penang state, once known as the Silicon Valley of the East, is seeking to reclaim its title.

In line with the country’s national semiconductor strategy, Penang wants to tap into the front-end chip manufacturing supply chain – which involves wafer fabrication, advanced testing and packaging and integrated circuit design – to contribute to a target to attract US$115 billion worth of investments by 2030.

Malaysia, currently the sixth-largest semiconductor exporter in the world, has been focusing largely on back-end activities. The country commands 13 per cent of the global assembly, testing and packaging market.

To support the industry to move up the value chain, more than US$5.6 billion has been earmarked by the government under the national semiconductor strategy unveiled in May last year.

Penang, located along the northwestern coast of Peninsular Malaysia, is home to over 350 multinational corporations. It has already attracted billions in investment from tech giants like Intel, Infineon, Lam Research and Texas Instruments.

An Infineon Technologies facility under construction in Kulim, bordering Penang. Photo: Bloomberg

In an interview, Penang’s chief minister Chow Kon Yeow was upbeat about the state’s tech sector and expects more investments in the near future.