By NurulJannah Kamaruddin
KUALA LUMPUR, May 20 (Bernama) -- Malaysia’s electrical and electronics (E&E) sector has grown by leaps and bounds, but it is certainly not the only one competing to lead the world in the semiconductor trade space.
While the nation is in the right direction to climb higher, right and bold actions are needed to reap the opportunities that the sector will generate in the years to come, with all eyes on the Malaysia External Trade Development Corporation (MATRADE), an agency under the Ministry of Investment, Trade and Industry, as it is tasked to reinforce Malaysia’s role on the global E&E industry.
MATRADE chief executive officer (CEO) Datuk Mohd Mustafa Abdul Aziz shared with Bernama his vision for making the industry future-proof and reaching a wider global market.
Proactively riding on FTAs to advance global presence, India's next
Malaysia, nestled in the heart of Southeast Asia, has become a cornerstone of the global semiconductor supply chain, with a strong presence in the United States of America (USA), Europe, and China.
To date, Malaysia has signed 16 free trade agreements (FTAs), including the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
These agreements facilitate seamless trade and investment flows, fueling its integration into the global supply chain and the broader economy's growth and prosperity.
Exports to FTA partners contributed a 69.6 per cent share or RM992.81 billion of total exports last year, with the main exports being electrical and electronics (E&E) products, petroleum products, and chemicals and chemical products.
Therefore, Mohd Mustafa said that through proactive engagement in international trade agreements, MATRADE can step up efforts to tap into new markets, ensuring the country does not miss the opportunity to reap the benefits of the booming E&E sector in markets like India.
India’s electronics manufacturing services industry is growing significantly, driven by a higher share of outsourcing by original equipment manufacturers (OEMs) as well as its developing component ecosystem sector and government incentives.
Currently, the electronics market in India is valued at U$155 billion (RM726.02 billion), with domestic production accounting for 65 per cent.
“Although Malaysia is among the top 10 of India’s import sources for semiconductor products in 2023, the contribution is only 2.9 per cent of the total import, and there remains vast opportunities for further growth,” he said.
Mohd Mustafa said MATRADE coordinates Malaysian companies’ participation in international trade fairs like International Electronics Manufacturing and Interconnections (IEMI) in Penang (24-25 July) and Bangalore, India (29-30 July, 2024), SEMICON Southeast Asia (SEA) in Kuala Lumpur (May 28-30), SEMICON West in San Francisco, USA (July 9-11) and Industrial Transformation Asia Pacific in Singapore (14-16 October).
For SEMICON SEA, MATRADE is partnering with reputable industry associations abroad, such as the China Semiconductor Industry Association (CSIA) and the Taiwan Electronic Equipment Industry Association (TEEIA), to bring in their member companies for business matching programs with local companies.
“This year, MATRADE’s involvement in SEMICON SEA will take a different approach, working closely with MIDA and other government agencies like Malaysia Digital Economy Corporation (MDEC) and Malaysian Research Accelerator for Technology & Innovation (MRANTI).
“The Malaysia Sourcing Pavilion will include business matching, round table meetings, Vendor Development Programme by Intel, sourcing talks by TEEIA and the Malaysian Consortium of Mid-Tier Companies (MCMTC), pocket talk on environment, social, and governance (ESG), networking sessions and exhibitions coordinated by MDEC and MRANTI featuring Malaysian tech companies,” he added.
Meanwhile, this year marks the 15th consecutive year MATRADE has participated in SEMICON West in the USA, a flagship international trade show for the global semiconductor and microelectronics industry.
SEMICON West also highlights related sub-industries such as LED, micro-electro-mechanical systems (MEMS), photovoltaics, flexible electronics, displays and nanoelectronics.
Mohd Mustafa said Malaysia’s pavilion at SEMICON West will showcase the technical capabilities of 10 Malaysian companies seeking to explore opportunities for collaboration with foreign counterparts.
Building on the milestone
Mohd Mustafa said Malaysia has been a big winner with substantial benefits in the E&E sector and solidifying its position as a regional hub for semiconductor production.
On top of that, data from S&P Global Trade Analytics (GTA) ranked Malaysia as the tenth-largest exporter of E&E products and the sixth-largest exporter of semiconductors, despite the challenges faced by the global electronics market.
Malaysia is also among the top 10 exporters of automatic test equipment (ATE) in the world.
The nation's achievement is also well supported by better trade performance figures, having recorded a staggering RM931.39 billion or US$204.19 billion in electrical and electronics trade in 2023 alone.
Mohd Mustafa highlighted that a significant portion of this trade, totalling RM575.45 billion (US$126.18 billion), came from exports, highlighting the vital role of the E&E industry in Malaysia's economy.
He said major export markets include Singapore, the USA, China, Hong Kong, and Taiwan.
“Semiconductor devices, integrated circuits (ICs), transistors, and valves’ exports collectively made up 67 per cent of Malaysia's total E&E exports in 2023, amounting to RM387.45 billion (US$84.95 billion),” he said.
Mohd Mustafa said that over the next five to 10 years, the trade performance in E&E is expected to be influenced by global trends that present both opportunities and challenges.
“Malaysia should be ready to leverage these trends, which include demographic shifts, economic transformations, sustainability requirements, evolving shopper behaviours, the convergence of manufacturing costs and supply chains, uncertainties in global trade, and other factors,” he said.
He is also confident that the New Industrial Master Plan 2030 (NIMP 2030), which aims to enhance Malaysia’s economic complexity through strategic sectoral development, can support the industry’s future needs.
Among the 32 identified sectors, the E&E sector stands out, focusing on various opportunities driven by strong global demand, including moving up the value chain to focus more on front-end activities, specifically in integrated circuit (IC) design, advanced packaging, and expanding wafer fabrication capabilities.
“As the global trend is geared towards advanced technology in Artificial Intelligence (AI)-powered devices, 5G, quantum computing and autonomous vehicles (AV), Malaysia is expanding its focus beyond IC design into high-value sectors.
“Products such as electric vehicles (EVs), drone tech, aerospace, and medical technology (MedTech) leverage on technological advancements such as the integration of AI and Internet of Things (IoT) for enhanced performance and safety, usage of new materials and technologies for lighter and climate-conscious technologies to reduce carbon emissions; robotics and automation,” Mohd Mustafa said.
He said that the recent establishment of the National Semiconductor Strategic Task Force (NSSTF) and the announcement of the IC Design Hub in Selangor by Prime Minister Datuk Seri Anwar Ibrahim is critical to supporting high-value, front-end design work, and moving away from production.
Boosting SME participation in the E&E space
Mohd Mustafa said that small and medium enterprises (SMEs) have contributed significantly to the country's exports and employment in the manufacturing sector.
These companies produce E&E components like semiconductors, printed circuit boards, passive components, as well as consumer products and will continue to be assisted.
Among mid-tier companies, ViTrox Technologies Sdn Bhd shared that the support provided by government entities, particularly MATRADE, through comprehensive market insights, extensive networking opportunities and strategic partnerships have significantly contributed to solidifying its stature as a forefront innovator in manufacturing solutions.
“ViTrox Technologies’ international export trajectory, which spanned 32 countries and involved engagement with 363 customers worldwide in 2023, exemplifies our strategic approach to global market penetration,” its business development senior director Gary Leong Chee Yeong said.
Founder and group managing director of JF Technology Bhd (JF Tech) Datuk Foong Wei Kuong said valuable support provided by MATRADE has been instrumental in the company’s journey.
“For instance, the Malaysian Pavilion booth organised by MATRADE for SEMICON West in San Francisco opened doors in the US market.
“Separately, our recent participation in the Mid-Tier Companies Development Programme Wave 10 as part of the export growth acceleration program by MATRADE led to numerous opportunities and valuable new partnerships,” he noted.
CG Global Profastex Manufacturing Sdn Bhd, a woman-owned SME said that since becoming a member of MATRADE in 2018, the company has expanded its global market presence in the US, United Kingdom, France, Australia, and China through participation in international trade fairs and business matching activities.
“The existence of MATRADE offices worldwide, staffed with capable representatives, facilitates a smooth process of entering new markets,” managing director Siti Padillah Abdul Wahab said.
The global semiconductor sales are estimated to grow by 13.1 per cent to US$588.36 billion (RM2.76 trillion) in 2024.
The sector's growth is expected to be fueled by the memory sector, which is on track to increase over 40 per cent to US$130 billion (RM608.9 billion) in 2024.
-- BERNAMA
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