KUALA LUMPUR: Malaysia needs an action plan to capitalise on the US move to provide US$52 billion (RM221 billion) in subsidies to its semiconductor manufacturers.
The subsidy, introduced through the passage of the Creating Helpful Incentives to Produce Semiconductor for America Act (CHIPS Act), is to improve the country’s competitiveness and self-reliance in the keystone industry for economic and national security.
Malaysia Semiconductor Industry Association president Wong Siew Hai said Malaysia would need policy action to reap benefits from the US move.
He said such a policy would spur more fabrication and Malaysia would need to build capacity to capture the ensuing opportunities in the semiconductor industry.
“But of course, there are other countries competing with us for this opportunity. If Malaysia is serious about taking advantage of these opportunities it will need to have similar incentives under the CHIPS Act to entice them,” he told the media at the launch of Nomura Global Shariah Semiconductor Equity Fund by Nomura Asset Management Malaysia.
On the capacity expenditure of the industry, Wong said there is a bottleneck as it will take some time for the additional capacity to materialise.
For fabrication, he said it would take a total of three years — two years to build and another to ramp up.
“For semiconductors it is relatively shorter but there is a long lead time to acquire the equipment needed. Companies that had the foresight to make their order last year would have a better opportunity to increase their capacity at a faster rate,” he said.
As for the capacity shortage, Nomura Asset Management UK’s senior equity analyst Takeshi Kawamoto believes the issue has largely been resolved for the consumer side of the industry, namely for the personal computers and smartphone markets.
However, he said, US carmaker General Motors had warned that the shortage in the automotive industry was likely to last into the new year.
The carmaker had said the shortage of chips had led to it missing its earning targets as almost completed cars could not be delivered because they were missing a few crucial chips.
Aside from the chips used in the automotive sector, Kawamoto said, micro-controller chips were also in short supply and it would take a long time to increase capacity.
“People are a bit too optimistic on how quickly the shortage can be resolved. Based on the current information the shortage would last for at least another year,” he said.
On the industry prospects, Inari Amerton Bhd group CEO and executive director Lau Kean Chong sees growth in segments such as smart gadgets, automotive and optical communications.
“Among these optical communications, which entails infrastructure work, is expected to see higher growth than the others,” Lau said.
Nomura Global Shariah Semiconductor Equity Fund is available for a minimum initial investment of RM1,000 or US$1,000.