Transformation through tech titans
In recent years, Malaysia has seen a significant increase in technology investments, fuelled by the expansion of tech giants into the burgeoning South-East Asian market.

In early May, Microsoft committed US$2.2bil (RM10.4bil) over the next four years to develop new cloud infrastructure and enhance artificial intelligence (AI) capabilities in the country.

The investment includes AI technical and vocational skills for 200,000 Malaysians through the AI Teach Malaysia programme organised in collaboration with the Asean Foundation and the Biji-biji Initiative.

Additional initiatives strive to provide women with opportunities and support to build careers in cybersecurity through the Ready4AI&Security programme, while also offering AI education to youths.

“We are committed to supporting Malaysia’s AI transformation and ensuring it benefits all Malaysians,” Satya Nadella, chairman and CEO of Microsoft, said in a statement.

“Our investments in digital infrastructure and skilling will help Malaysian businesses, communities, and developers apply the latest technology to drive inclusive economic growth and innovation across the country.”

Microsoft is not alone in its venture, with Google committing to invest US$2bil (RM9.4bil) in the same month to establish its first data centre in the country and add Malaysia as a Google Cloud region. This move is expected to create 26,500 jobs in the country and positively contribute to the economy in excess of US$3.2bil (RM15.1bil) by 2030.

According to Google’s chief financial officer, Ruth Porat, this is its largest investment in the country.

“With today’s announcement, Malaysia and Google are partnering to advance our shared work to create a supportive ecosystem for innovation and unlock the potential of digital transformation,” she said.

The ICT industry accounts for a significant portion of the nation’s gross domestic product (GDP). In 2022, it contributed 23%, translating to RM412.3bil, which underlines just how crucial the digital economy’s development is for the country.

Malaysia has had a long-established history of being a destination for tech investment, notably with semiconductor giants Advanced Micro Devices (AMD) and Intel setting up shop in Penang back in the 1970s.

In 2021, Intel announced a US$7bil (RM32.8bil) investment towards constructing a chip-packaging and testing facility in Malaysia by next year. This is expected to quadruple the chipmaker’s capacity, according to a 2023 report from Nikkei.

In the report, Intel’s corporate vice president of assembly test manufacturing, Robin Martin, stated that Malaysia will eventually be the semiconductor giant’s largest production base for 3D chip packages.

Rival AMD, on the other hand, said last year that it would be expanding to a new facility in Penang. It’s expected to become a major tenant at the state-developed Integrated Circuit (IC) Design and Digital Park known as Global Business Services (GBS) By The Sea upon its completion, scheduled for the fourth quarter of 2024.

Earlier in 2022, the chipmaker’s supplier, TF AMD Microelectronics Sdn Bhd, committed to an RM2bil investment for the construction of a second manufacturing plant in Malaysia.

Last year also marked the announcement of €5bil (RM25.5bil) investment into Malaysia by German chipmaker Infineon for the construction of a third wafer fabrication module in Kulim, Kedah. Additionally, GlobalFoundries opened a RM4.7mil factory control hub in Penang.

Building the future

The country is no stranger to the semiconductor industry, controlling 13% of the global market for packaging, assembly, and testing services, according to a report from the Malaysian Investment Development Authority.

Late last month, Prime Minister Datuk Seri Anwar Ibrahim unveiled key initiatives to boost Malaysia’s position in the semiconductor sector, aiming for RM500bil in investments through the National Semiconductor Strategy (NSS) to develop the nation as a global semiconductor hub.

“Geopolitical dynamics aside, robust multinational semiconductor production remains vital for humankind’s survival, particularly as we are running out of time in our climate action and risk mitigation. Today, I offer our nation as the most neutral and non-aligned location for semiconductor production to help build a more secure and resilient global semiconductor supply chain.

“Our key proposition, Malaysia: Bridging Technology For Our Shared Tomorrow, reflects our sincere aspiration to promote technology for humanity’s greater good by being your leading partner and collaborator in the global semiconductor industry and beyond,” he said during his keynote speech at the Semicon South-East Asia 2024 expo.

In March, Amazon Web Services (AWS) announced its commitment to invest at least RM25.5bil by 2037 in partnership with the Malaysian government. Additionally, it plans to launch an AWS infrastructure region in Malaysia, allowing it to serve end users from data centres located within the country.

Looking towards the field of artificial intelligence (AI), Nvidia partnered with YTL Power in December last year as part of a US$4.3bil (RM20.1bil) investment deal, which will see the companies work together to build supercomputers utilising the graphics giant’s AI chips.

Nvidia CEO Jensen Huang said in a report: “Malaysia is an important hub for South-East Asia computing infrastructure, which requires access to land, facilities and power, and YTL could play a great role in that.”

The collaboration between the two entities will also see the development of a primarily Malay large language model on Nvidia’s cloud computing platform.
Malaysia,Technology,Manufacturing
Microsoft, Google and Nvidia are driving Malaysia’s digital transformation with billions in investments, boosting the semiconductor sector.