Advanced semiconductor packaging, AI, automation and automotive electronics offer major growth opportunities
MALAYSIA’S electrical and electronics (E&E) industry is shifting towards higher-value activities, with advanced electronic packaging, artificial intelligence (AI), automation and automotive electronics emerging as key growth areas
Global Electronics Association (GEA) country manager Dr Ranee Ramya said Malaysia’s long-established E&E ecosystem, dating back to the 1970s, provides a strong foundation for the country to expand into advanced packaging as electronic products become increasingly compact and sophisticated.
“Malaysia has had a legacy in assembly operations since the 1970s. But the industry is evolving towards advanced electronic packaging,” she told The Malaysian Reserve (TMR).
She said local companies have begun to adopt advanced electronic packaging, while the newly established Malaysia Advanced Packaging Consortium has brought together local players across different parts of the ecosystem to develop technologies that could be produced in Malaysia and used globally.
She added that GEA is working with Mimos Bhd to support the development of advanced packaging through standards, guidelines and training, including programmes covering chiplets, failure analysis and thermal management.
However, on competitiveness, Malaysian manufacturers must ensure quality is not compromised despite cost pressures, as global customers increasingly prioritise quality when selecting suppliers.
GEA has introduced a Standard Gap Analysis programme in Malaysia to identify weaknesses in manufacturing processes, quality and workforce capabilities before companies undergo formal audits.
Talent readiness remains another key issue. Ranee said Malaysia needs to develop skills from the school level through universities and technical and vocational education and training (TVET) institutions.
Training should extend beyond engineers to operators and technicians, who play a critical role in maintaining quality on the manufacturing floor.
“We should also focus on operators and technicians because they are basically the oil of the engine. They are running every day in the workforce,” she added.
Ranee said collaboration with universities could help strengthen the talent pipeline, citing partnerships with institutions such as Universiti Kuala Lumpur (UniKL) where Printed Circuit Board (PCB) design, fabrication and electronic assembly are taught and practiced for students and lecturers.
She said Malaysia’s semiconductor and E&E ecosystem is broadly on par internationally in adopting emerging technologies, but must maintain its pace as technologies such as chiplets, 2.5D/3D packaging and AI-enabled inspection advance globally.
For small and medium enterprises (SMEs), GEA helps companies close manufacturing and skills gaps through standards, training and pre-audit programmes, with the objective of enabling more local companies to meet international requirements and participate in global supply chains.
Looking ahead, Ranee identified talent readiness and supply-chain resilience as two key factors that would determine Malaysia’s ability to strengthen its position as a global E&E hub.
Ranee also pointed to opportunities in automotive, machinery, AI, automation and supplying technologies for data centres.
“Although Malaysia is a small country, we are in the eye of the world.
“For us to keep the pace, we need to be on par with the industries on talent readiness, usage of international standards as well as adaptability to current technology,” she added.
Malaysia needs to develop skills from the school level through universities and TVET institutions (Pic
Malaysia’s semiconductor industry needs to raise productivity, improve yields and quality, and reduce waste and defects as manufacturers face increasing cost and talent pressures.
Malaysia Semiconductor Industry Association (MSIA) president Datuk Wong Siew Hai said greater adoption of AI and smart manufacturing could help reduce reliance on manual processes.
He added that companies also need to upskill their workforce to support increasingly sophisticated manufacturing operations.
“To be globally competitive, companies must work hard to reduce costs.
“There will be a need to improve yields and quality, reduce waste and defects,” he told TMR.
Wong also called for closercollaboration between industry and the government to improve the efficiency of material movement, logistics and approval processes, noting that time savings could translate into lower business costs.
Local SMEs cannot rely solely on price competitiveness, says Lee
On Malaysia’s readiness for advanced semiconductor packaging, he said the establishment of the Advanced Packaging Innovation & Research Centre (APIRC) in the Northern Corridor Economic Region (NCER) could help prepare the industry by training engineers and technicians.
Besides that, it also provides facilities to develop prototypes for companies working on advanced packaging technologies.
The initiative would support Malaysia’s preparations for wider adoption of advanced packaging as the industry moves towards technologies requiring more sophisticated capabilities.
Meanwhile, Federation of Malaysian Manufacturing (FMM) president Jacob Lee said Malaysia’s E&E industry must continue moving towards higher-value manufacturing as local manufacturers, particularly SMEs, face growing cost and quality pressures in global supply chains.
SMEs cannot rely solely on price competitiveness and should increase investment in research, development and innovation to develop higher-quality, environmentally friendly and user-friendly products.
“Malaysian SMEs cannot compete solely on price. We have to move up that value chain,” Lee told TMR.
Rather than reducing people’s role, automation can change the type of work they do (Pic
Malaysia has built a relatively comprehensive E&E ecosystem over the past three to five decades, with capabilities spanning backend packaging and testing as wellas the production of equipment for the semiconductor industry.
Greater collaboration between local companies, universities and global semiconductor leaders could help Malaysia accelerate its entry into emerging technologies and higher-value segments such as advanced semiconductor packaging.
Whereas on talent, Lee said Malaysia’s education system is capable of producing competent engineers and workers, with Malaysian talent in demand among advanced companies globally.
However, the bigger challenge is retaining this talent by creating stronger career pathways and better-paying, quality jobs within the country.
“Are we creating a conducive career pathway?” Lee asked.
He also said SMEs could leverage universities’ research capabilities, laboratories and postgraduate talent to support their technological transformation, particularly when companies lacked the resources to recruit engineers and researchers directly.
Although Malaysia should focus on emerging sectors such as semiconductors, electronics, data centres, AI, the low-altitude economy, circular economy and energy transition, support should also be extended to conventional manufacturers seeking to move up the value chain.
On global trade pressures, Lee said tariff differences involving Malaysia are currently relatively small and manageable, but higher tariffs could ultimately raise costs and reduce consumer affordability.
He also highlighted the growingimportance of non-tariff barriers, including environmental requirements, which could create additional challenges for Malaysian exporters.
“While we focus and concentrate on moving into the emerging technologies, we must also not neglect conventional manufacturers who probably need support as well to move up the value chain,” he said.
Collaboration with universities such as UniKL could help strengthen (Pic
Malaysia’s E&E manufacturers, particularly SMEs, can use robotics, automation and AI to improve productivity and move towards higher-value manufacturing.
Move Robotics CEO Hazeli Rasul noted that technology adoption must be matched by skilled talent and a clear business case.
He said automation should not be viewed merely as a means of replacing workers, but as a way to shift employees away from repetitive and physically demanding tasks towards work requiring greater skills, decision-making and problem-solving.
“Rather than reducing people’s role, automation can change the type of work they do,” he told TMR.
Hazeli said larger manufacturers and multinational corporations in Malaysia are generally more advanced in adopting automation and data-driven manufacturing, while SMEs face greater barriers including upfront deployment costs, uncertainty over returns on investment and the capability needed to maintain new systems.
Hazeli says automation should solve real operational problem
The strongest case for automation arises when companies face rising production volumes, tighter quality requirements or manpower constraints.
Hazeli believes that SMEs should first assess their existing processes, productivity, cycle times, quality issues and operating costs before investing.
As Malaysia pushes into higher-value semiconductor and E&E activities, opportunities are emerging in autonomous mobile robotics for material movement, machine vision, AI-enabled inspection and smart manufacturing software such as AI-enabled manufacturing execution systems (MES).
Malaysia does not necessarily need to develop every manufacturing technology from scratch but should strengthen local capabilities in system integration, software development, robotics, AI and engineering.
Through these ecosystems, Malaysia can develop solutions suited to the requirements of its semiconductor and E&E industries.
“Automation should solve a real operational problem, rather than being implemented simply because the technolog y is available,” Hazeli said.
SMEs should focus on three priorities when adopting automation: Understanding the process, establishing a measurable business case and developing the people needed to operate, maintain and continuously improve the technolog y.
Taken together, industry players said Malaysia’s next phase of E&E growth will depend on its ability to move beyond cost competitiveness and build capabilities in advanced technologies, productivity and talent.
With advanced packaging, AI and automation reshaping the global electronics industry, stronger collaboration between industry, government and academia, alongside greater investment in skills and innovation, will be crucial for Malaysian companies to capture higher-value opportunities and remain competitive in global supply chains.
- This article first appeared in The Malaysian Reserve weekly print edition
