Tech: Selangor not attempting to outshine Penang in E&E sector, Vietnam the main rival, says Sidec’s Yong – The Edge Malaysia
This article first appeared in The Edge Malaysia Weekly on July 1, 2024 – July 7, 2024
WHEN it was announced at the KL20 Summit 2024 that Selangor would be building the largest integrated circuit (IC) design park in Southeast Asia, and that British chip designer Arm Holdings plc was prepared to license its technology, more than a few eyebrows were raised.
How could Penang — dubbed the Silicon Valley of the East owing to its strong and vibrant electrical and electronics (E&E) ecosystem — lose the multi-million-ringgit project to Selangor?
Against a backdrop of recriminations — by former Penang chief minister Lim Guan Eng and his successor Chow Kon Yeow — CEO of Selangor Information Technology & Digital Economy Corp (Sidec) Yong Kai Ping is quick to play down talk that Selangor is attempting to overshadow Penang as the country’s semiconductor hub.
Yong heads the agency spearheading the IC design hub project, called the Malaysia Semiconductor Accelerator & IC Design Park, located at the Puchong Financial Corporate Centre (PFCC). The project, which is poised to begin operations next month, is part of the country’s efforts to move beyond back-end chip assembly and testing and into high-value front-end design work.
In the midst of the brouhaha over who won what, Yong appears clear on his mandate and who Malaysia’s “real” competitors are.
He emphasises that the “enemy” is not within but without (outside), and that Malaysia needs to be more organised. Vietnam may already be the preferred choice of semiconductor investors as we lack sufficient human capital in the sector, he elaborates.
Yong says Malaysia should be mindful of the rise of Vietnam’s Saigon High-Tech Park (SHTP), which has an ambitious plan to nurture a talent pool of 50,000 design engineers. The country’s plans are not to be taken lightly given that its students and graduates already outscore Malaysia’s in science and math subjects by a wide margin.
Recently, Malaysia said it would earmark RM1.2 billion to cover the cost of training and upskilling 60,000 high-skilled local engineers in a bid to ease the shortage of talent in the industry.
“We must understand that the scale of companies that come here due to trade diversion is huge. No single state in Malaysia has the sufficient capacity to receive them. We should not opt for a piecemeal approach, and we should not be territorial,” Yong tells The Edge in an interview at Sidec’s office in i-City, Shah Alam.
According to him, the rise of SHTP, with its comprehensive 700ha ecosystem that encompasses the entire semiconductor supply chain and focuses on cultivating a talent pool of engineers, presents a compelling challenge to Malaysia’s position in the global semiconductor landscape.
“I foresee that when SHTP is fully launched, they will be rivalling us. Our real competitor is Vietnam. This is a serious situation because a lot of companies are actually mulling plans to go to Saigon if they cannot find talents in Malaysia,” he adds.
Yong points out that many Malaysians do not understand the potential of SHTP as they have never visited the hi-tech park. At the same time, they may underestimate what Vietnam can do.
“Me and my colleagues have been to SHTP, so we know what is happening over there. Malaysia has over five decades of history and experience in the E&E sector, so we still have the advantage.
“But then again, Malaysia cannot be complacent. From what we gathered from the Japanese, Taiwanese and Chinese investors, whenever they come to Malaysia, they would also visit Vietnam.”
Although Penang has earned its moniker “Semiconductor Island”, Yong considers it a bit “too conservative”.
He prefers the idea of a corridor, such as a “West Coast Semiconductor Corridor”, with the capacity to host the current exodus or shift taking place among global semiconductor players owing mainly to the US-China trade tensions.
“At the moment, Malaysia still does not have the ‘corridor’ concept,” he observes.
Nevertheless, from the number of enquiries received, Yong estimates a doubling of expansion in the Kulim-Penang corridor, and perhaps even a spillover to northern Perak. At the same time, Selangor and Negeri Sembilan could create another corridor, while Melaka and Johor could host yet another base of semiconductor companies.
“In fact, we should also be looking at opportunities to work closely together with Singapore, which also has a strong E&E ecosystem. And quite frankly, if you look at the rest of the region, not many Asean countries could compete with us in the E&E space. The way I see it, the main competition [in] attracting global FDI (foreign direct investment) is between Malaysia and Vietnam now,” Yong says.
Sidec, a subsidiary of Invest Selangor Bhd, is the state government agency mandated to lead the transformation of Selangor into the digital hub of Asean. It is under the purview of the Standing Committee of Trade and Investment, Selangor.
In the first nine months of 2023, the state attracted investments totalling RM41.56 billion in the manufacturing and services sectors. The manufacturing sector drew RM16.96 billion, with the E&E subsector being the largest contributor with RM9.75 billion.
In 2022, Selangor received approved investments amounting to RM3.94 billion in the E&E industry. These investments led to the creation of 3,515 employment opportunities within the state.
In a bid to move from “Made in Malaysia” to “Made by Malaysia”, Selangor’s IC design park — in collaboration with the federal government, international semiconductor firms and venture capitalists — aims to position Malaysia as a potential powerhouse in the global IC design industry.
The project secured crucial central government support through the Economic Department, leveraging a co-investment model with Selangor amounting to nearly RM200 million.
It also secured the commitment of four major partners, namely Arm Holdings, Phison Electronics Corp, SkyeChip Sdn Bhd and Shenzhen Semiconductor Industry Association.
Nasdaq-listed Arm Holdings — a subsidiary of Japanese conglomerate SoftBank — is a notable name in the global semiconductor industry as it specialises in providing intellectual property (IP) cores and related technologies for processors. It licenses its designs to over 1,000 global partners such as Apple, Microsoft and Samsung.
Taiwanese technology firm Phison — co-founded in 2000 by Sekinchan-born techpreneur Datuk Pua Khein-Seng, who is famous for inventing the single-chip USB flash drive or pendrive — is the world’s largest independent provider of NAND Flash controllers and comprehensive storage solutions.
SkyeChip, founded in 2019 by Fong Swee Kiang, specialises in the development of proprietary silicon IP and is already making a name for itself in artificial intelligence and high-performance computing IC solutions.
The Shenzhen Semiconductor Industry Association, meanwhile, has a membership of 587 semiconductor companies operating in China. It offers a comprehensive suite of support services to the industry’s ecosystem such as research institutions and universities, supply chain management, financial services and IP management.
Yong highlights that the IC design park will be equipped with common public service tools and facilities, including affordable electronic design automation tools, servers, IP, multi-project wafer services and training programmes.
“The primary goal of the park is to promote original design manufacturing, encouraging local involvement in product design, prototyping and production — shifting from ‘Made in Malaysia’ to ‘Made by Malaysia’,” he stresses.
Yong applauds the “unwavering commitment” of four key figures — Phison’s Pua, BlueChip VC Sdn Bhd co-founder Datuk Lai Pin Yong, Selangor Menteri Besar (MB) Datuk Seri Amirudin Shari, and Ng Sze Han (exco of Investment, Trade and Mobility in the Selangor government) — and the leadership of Economy Minister Rafizi Ramli, for bringing this visionary project to life.
“Selangor is fortunate to stand on the shoulders of two towering figures in Datuk Pua of Phison and Datuk Lai of BlueChip VC. Without their vision and support and guidance, we would not have been able to make it so far. Of course, the support from MB, YB Ng and YB Rafizi also allows us to push forward without any worries.”
Yong emphasises that the IC design park is not just a property or a training centre, but also an accelerator that helps to scale businesses. It is also a “business development manager” that helps to grow IC design companies in Selangor and Malaysia as a whole.
“The IC design park has received tremendous response as we have already expanded our space from three floors of 45,000 sq ft to five floors of 70,000 sq ft — an increase of more than 50%.
“We will house more than 300 design engineers with one of the highest starting salaries of RM6,000 to RM7,000 for fresh graduates. After we put up the recruitment advertisement, we received more than 600 resumes that will be passed to the semiconductor companies,” he reveals.
Yong says Sidec is expecting another four to five semiconductor companies — local, joint-venture and foreign — to move into the IC design park.
“In fact, we are almost reaching full capacity soon. We are actively looking at the possibility of expanding by the end of the year to a much bigger space, in order to host another 600 design engineers, cultivating a total of 1,000 IC engineers within the first two years.”
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