KUALA LUMPUR May 22, 2026 – Senior Political Advisor to Prime Minister Dato’ Seri Anwar Ibrahim and Chairman of the Malaysian Investment Development Authority (MIDA), Datuk Seri Utama Tengku Zafrul Aziz, has posed a bold question to Malaysians: Can the country win the Southeast Asian semiconductor race?
In a video posted on X (formerly Twitter) today, Tengku Zafrul, while walking in a park, highlighted Malaysia’s strategic position in the global semiconductor supply chain and the government’s ambitions to climb higher up the value chain.
“Boleh ke Malaysia menang lumba chip Asia Tenggara?” (Can Malaysia win the Southeast Asia chip race?), he asked, referencing an analysis by The Diplomat that positions Malaysia as one of the key players in the regional semiconductor landscape.
Malaysia’s Strong Foundation
Malaysia currently holds approximately 7% of global assembly, test, and packaging (ATP) capacity for semiconductors, making it a significant player in the outsourced semiconductor assembly and test (OSAT) segment. The country has decades of experience in the industry, with established hubs particularly in Penang.
Tengku Zafrul stressed that while Malaysia is not new to the sector, the focus has shifted from pure manufacturing to higher-value activities, including advanced research and development (R&D), integrated circuit (IC) design, and advanced packaging.
National Semiconductor Strategy (NSS) as Catalyst
Central to these ambitions is the National Semiconductor Strategy (NSS), launched in 2024 under the Ministry of Investment, Trade and Industry (MITI). The strategy is structured in three phases aimed at:
- Attracting RM500 billion in investments by 2030.
- Training and upskilling 60,000 engineers.
- Developing at least 10 Malaysian companies in design and advanced packaging with significant revenues.
- Positioning Malaysia as a global R&D hub.
The NSS is supported by substantial fiscal incentives, including a RM25 billion package, and has already secured over RM70 billion in approved investments in its first year.
Major players like Intel and Infineon continue to expand operations in Malaysia, drawn by the country’s established ecosystem, infrastructure, and skilled workforce. Tengku Zafrul also highlighted complementary opportunities with Singapore through initiatives like the Johor-Singapore Special Economic Zone (JS-SEZ) to attract high-value R&D and design investments.
Regional Competition Heats Up
The video comes amid intensifying competition across Southeast Asia. While Malaysia leads in established OSAT capabilities, Vietnam is rapidly gaining ground with aggressive incentives, lower costs, and large-scale investments, particularly from Samsung. Analysts note both nations as frontrunners in the ASEAN chip race, with Singapore maintaining strength in higher-end design.
Some online reactions to Tengku Zafrul’s post reflected domestic political debates, with critics crediting other figures for earlier groundwork, while others warned that political stability will be key to staying ahead of faster-moving rivals like Vietnam.
Outlook
Tengku Zafrul concluded by asking how far Malaysia can go, emphasizing that the coming years will determine the quality of jobs and economic opportunities for future generations.
As global demand for semiconductors surges — driven by AI, electric vehicles, and digital transformation — Malaysia’s success in executing the NSS could be pivotal in escaping the middle-income trap and securing a stronger position in the global technology supply chain.
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