“We seek to develop more players for the front-end, especially in the integrated circuit (IC) design, engineering and testing; IC packaging; and manufacturing modules, system devices and finished products.

“This critical front-end manufacturing needs to be groomed to link with the global value chain,” he said during the Malaysia National E&E forum yesterday.

While the sector promises a lot, the country is still confronted with a talent shortage. With the imposition of export bans by the United States towards China, as part of the US Chips and Science Act, Malaysia stands to benefit as it takes a neutral stand in this geopolitical issue.

The said bans include measures to curb supplies of certain semiconductor chips and chip-making equipment, particularly in regard to high-end chip manufacturing to China.

“About 13% to 14% of assembly and test capacity worldwide is here in Malaysia. Hence, Malaysia is very well-positioned to absorb a lot of this volume.

“However, the question is whether the country has the trained workforce that is needed to capture that increase of value-add in the back-end chip processes,” said Jan Thomas Nicholas, executive director, consulting – semiconductors, of Deloitte Consulting Sdn Bhd during a panel discussion.

He added that if Malaysia failed to generate a sufficient workforce, it will stand to lose out to other countries like India.

“India has been rolling out many incentives in this regard.

“As such, it shows that there are other countries that would love to gain some of these investments in back-end chip manufacturing if Malaysia is unable to create the skilled workforce needed,” said Nicholas.

While he also acknowledged that a trained workforce cannot be produced overnight, the consultant noted that Malaysia needs to develop its engineering talent by creating more value-added jobs in the sector.

“It is understandable that Malaysia cannot immediately conjure up thousands of needed talent, but the nation has to develop its STEM education by introducing more policies and incentives.

“That said, every country in the world is struggling to find enough microchip engineers.

“Generally, people within a country need to see that working in the semiconductor industry is a step-up for them. Malaysia has a lot of entrepreneurial people.

“What the country needs to do is to translate that into the semiconductor industry,” said Nicholas.

Sivasuriyamoorthy also revealed that Malaysia had signed the US-Malaysia memorandum of cooperation in May 2022 to further strengthen its semiconductor supply chain.

“Chipmakers are now facing growing inventory and shrinking demand. Inflationary pressures, combined with the US-China trade tension, where the US had taken another step towards hamstringing its geopolitical rival with export bans, have caused some trepidation and could pose difficulties for some semiconductor global players and disrupt the global supply chain,” he said.