PETALING JAYA: Malaysian semiconductor companies are in a position to benefit from supply chain disruptions that arise from China-Taiwan tensions, driven by oppor-tunities for collaboration and outsourcing manufacturing, said Malaysia Semi-conductor Industry Association (MSIA) president Datuk Seri Wong Siew Hai (pix).
Wong pointed out that Taiwan and China are major global semiconductor hubs. If the tension between them escalates, it will affect the global semiconductor supply chain, and Malaysia’s chip industry .
“The supply chain is very complex. There are about 50 economies around the world involved in the semiconductor supply chain, so even a company buys from 15 companies, (comprising) a combination (of markets in the supply chain). Some of them will come from China and some of them will come from Taiwan. So disruption is (to be) expected but, currently, we are not there yet, we are only talking about assumptions,” he told SunBiz.
Wong foresees that Taiwan and China companies will continue to expand to Malaysia despite the tension, because of risks that need to be mitigated by both parties in the event that the situation causes disruption of the global supply chain.
“(They will) continue to do this, where they see there is a risk that needs to be mitigated, they will go (to other places), both Taiwan and China. Malaysia will hopefully be the winner. If they don’t buy up our companies or build new factories then they will outsource their manufacturing to Malaysian companies,” he opined.
Wong remarked that there has been many investments and expansions in chip assembly and testing into Malaysia by major companies such as Intel, TF-AMD, Inari and Unisem. These companies will require factories to do packaging and testing, which will benefit Malaysia’s semiconductor industry.
“If it’s assembly test, all assembly test companies are expanding in Malaysia ... for those which are here, they are expanding facilities and if five or 10 fabrications are going to open up and they are going to run, they need factories to do packaging and testing. So, that part we will benefit.
“There are a lot of opportunities for Malaysia to work with Taiwan as well as China companies, in areas of technology, manufacturing and supply chain. There are a lot of opportunities. So it’s a matter of accessing where these opportunities are and what is relevant to Malaysia. At the same time, it’s a win-win (situation). China needs this, I can provide this (and) collaborate. Same thing with Taiwan because this fear of inability to ship to customers needs to be addressed ... (there needs to be) a strategy to ship your products all over the world,” Wong said.
An analyst said most companies have already repositioned their supply chains to navigate the situation, which should bode well for Malaysia, especially in the backend and electronics manufacturing service segments.
The analyst foresees that equipment makers (backend for Malaysia, specifically) should continue “to have a good time” as more capacity is built around Asean. Most companies will also continue to expand geographically.
Asked if Malaysia will be able to benefit from this tense situation, he said that in the event of any escalation, new capacity will have to be built elsewhere in order to fulfil global demand.
“The key concern is that the supply chain will be disrupted again. While new capacity is being built elsewhere, it takes time, so any near-term tension could cause companies to be unable to produce their goods (similar to the situation in 2020/2021 when demand for automotive/personal computers/laptops was solid but it was difficult to fulfil the demand).
“For the time being, equipment makers and backend companies and the ecosystem supporting these sub-segments continue to have a strong order outlook. Demand from auto/server/data centre is pretty much the last segments standing, from a demand perspective, so as long as there isn’t a major decline in outlook, most companies should still be well positioned for growth,” he said.
Recently, there have been a number of semiconductor-related investments into Malaysia, such as Infineon (RM8 billion), Intel (RM30 billion over the next 10 years), Nexperia (RM1.6 billion by 2026) and TF-AMD (RM2 billion).