This article first appeared in Forum, The Edge Malaysia Weekly on June 8, 2026 - June 14, 2026

Five years ago, several key people at OpenAI — the company that developed cutting-edge artificial intelligence (AI) solutions such as ChatGPT — broke away from the core team over ideological differences about the potential misuse of the technology.

The breakaway group, led by Dario Amodei, established Anthropic PBC. They managed to secure first-round funding of US$124 million (RM500.6 million).

Today, Anthropic, which created ChatGPT rival Claude AI, is worth almost US$1 trillion. The company recently prevented the US Department of Defense and President Donald Trump from gaining access to its solutions — a stand that has earned praise from groups that fear AI could be harmful to humanity.

In a nutshell, Anthropic has shown that there is some sense of sanity among the developers of frontier AI solutions to guard against the misuse of the technology.

Let’s come back to Malaysia.

Five years ago in 2021, the country was helmed by then prime minister Datuk Seri Ismail Sabri Yaakob of Umno, who misread the people’s mood. He called for a general election (GE) a year later and lost power to the Pakatan Harapan (PH) coalition headed by Datuk Seri Anwar Ibrahim.

Today, the country’s political landscape remains the same. The PH government is fragile and facing challenges from its partners, particularly Barisan Nasional (BN), which is led by Umno. The test of strength for Anwar’s government will be the upcoming state elections in Johor and Negeri Sembilan.

Amid the election fever, there is talk of new political alliances. Anwar’s Parti Keadilan Rakyat (PKR) has been weakened by the departure of his former deputy president, Datuk Seri Rafizi Ramli, who has taken over another political party, Parti Bersama Malaysia (Bersama).

Whether Anwar continues to lead the country after the next general election will depend on the performance of PH, a coalition he leads that is anchored on DAP. During GE15 in 2022, PH won 82 seats, with PKR contributing 31 and DAP securing 40.

Umno-led BN won 30 seats, finishing behind Perikatan Nasional (PN), which captured 74 parliamentary seats. Although lagging behind PH and PN, Umno — with 26 of the 30 MPs in BN — became the kingmaker. The party threw its support behind Anwar to form the federal government in return for public posts.

Apart from government positions, a sticking point for Anwar’s critics is that under his watch, the public prosecutors have not pursued graft charges against Umno president Datuk Seri Ahmad Zahid Hamidi, citing a lack of evidence.

In GE16, new alliances could take shape. Rafizi’s Bersama is eyeing PKR’s seats and has stated that the party would not want to be part of any alliances. But in politics, nothing is permanent. Parti Pribumi Bersatu Malaysia (Bersatu) is no longer aligned with PAS, which is the dominant partner in PN. So, PAS is trying to woo Umno to form Muafakat 2.0 in a move to form a Malay-Muslim majority government.

If an alliance between PAS and Umno takes shape, it really would not be a new development. The two parties had formed a pact before, but eventually failed. History has shown that no government dominated by a single race has been able to govern Malaysia well.

Politics ruled by race and religion has held sway in Malaysia, especially since 2018. It will continue to dominate the nation’s mood until voters get their choice of leaders right. It is a sad state of affairs for a country with so much potential, especially in the area of technology.

We have nurtured a solid group of companies in Penang, Selangor and Johor that has the ability to provide the high-quality backroom services sought by Big Tech companies on the global stage. But sadly, even technology is politicised in Malaysia.

In recent years, the biggest development for the Malaysian technology sector has been the forging of an agreement with UK-based Arm Ltd to help local semiconductor companies move higher up the value chain by designing more optimum integrated circuits for use in servers and other hardware for AI applications. The overall objective was to move the Malaysian electronics industry upstream in the semiconductor space and ensure its continued relevance.

Rafizi, who was the minister in charge, and his then assistant James Chai are being investigated for alleged corruption. The investigations came just after the former minister of economy broke away from PKR. Both Rafizi and Chai have denied the allegations.

Malaysia is an important player in the global technology space. Some 45% of its merchandise exports are related to the electrical and electronics (E&E) sector. It is a pity that the country has not been able to take advantage of the situation to nurture companies capable of advancing technologically in the AI era.

The AI era represents a huge technological shift. Cutting-edge AI solutions are going to be here for a long time, requiring chips and servers that are more efficient and able to process huge amounts of information in seconds.

Sadly, we have missed out on nurturing companies that can support these AI firms. Almost all of our semiconductor companies are still undertaking backend operations. We do not have any companies that are near the likes of Samsung Electronics Co Ltd, SK Hynix Inc or Taiwan Semiconductor Manufacturing Co Ltd (TSMC) — all of which have surpassed US$1 trillion in value owing to their production of memory chips and processors required by AI giants like OpenAI and Anthropic.

This is not the first time Malaysia’s semiconductor industry has missed out on opportunities. The industry lagged behind when the global technology landscape gravitated towards the convergence of technology, media and telecommunications (TMT).

The hype and exuberance over TMT convergence caused a massive bubble in the US, ending with the dotcom bust in 2000. This was primarily due to the lack of infrastructure to support the innovations that TMT promised. From 2010 onwards, when broadband and smartphones became easily available, TMT convergence finally fulfilled its potential. It led to the rise of companies such as Apple, Alphabet, Meta and Netflix. On the hardware side, TSMC became a global player by manufacturing cutting-edge memory chips.

In the last three years, big technology companies in the US have been spending billions on AI and its related infrastructure. According to reports, Google, Microsoft, Amazon and Meta are spending US$725 billion this year to build data centres and fund frontline AI companies like Anthropic and OpenAI. This is on top of the US$410 billion spent last year.

The amount of money being channelled towards AI is causing lofty valuations. The US$1 trillion mark is the new magical number, with no fewer than 14 companies achieving it. Of these 14 companies, 12 are technology firms, including two from South Korea and one from Taiwan. Investor exuberance over the two South Korean companies — Samsung Electronics and SK Hynix — has propelled the Korea Exchange to become the best-performing market this year, creating massive wealth.

Clearly, Malaysia has missed out on the AI exuberance, despite the fact that the country’s exports largely depend on the E&E sector.

Our stock market is a laggard. It has not moved much or created significant wealth in the last five years. And we simply do not have a company that can create a multiplier effect on the equity market to generate that kind of wealth.

The exuberance surrounding AI will eventually come to an end when Big Tech spending slows down. When that happens, all that will be left in Malaysia will be the data centres — an infrastructure that does not provide mass employment, but requires a huge supply of electricity and water to operate.

Malaysia will in all likelihood still be grappling with a political quagmire where leaders are still bogged down by issues of race and religion. It will be as though time has stood still in Putrajaya, while changes in the technology world have simply waltzed past us.

M Shanmugam ([email protected]) is a contributing editor at The Edge

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