KUALA LUMPUR (Nov 25): Malaysia must strengthen its collaboration with other countries to mitigate the risks posed by a fragmented global supply chain, especially amid escalating US-China trade tensions, following Donald Trump’s return to the US presidency, Deputy Investment, Trade and Industry Minister Liew Chin Tong said on Monday.
“We are concerned about this issue (US-China trade tensions). There is an intentional attempt to bifurcate the global supply chain — the US for the US, China for China.
"We need to work with the middle [powers] to avoid the risks,” Liew told reporters after inaugurating the Malaysia Semiconductor Industry Association's (MSIA) National E&E Forum.
According to Liew, the Malaysian government and MSIA have signed a memorandum of understanding (MOU) with Brazil's semiconductor industry, involving key organisations such as the Brazilian Association of the Semiconductor Industry and the Brazilian Association of the Electrical and Electronics Industry.
Additionally, the government is in discussions with the Netherlands government to strengthen ties with semiconductor equipment giants like ASML Holding, he said.
In addition, Liew urged Malaysia to move beyond its traditional role as a manufacturing hub and focus on higher-value sectors such as research and development, innovation, and advanced technology production, particularly as the world shifts towards artificial intelligence (AI).
“Creating our own technology is not easy. We must rethink our approach. Too often, the conversation revolves around securing more government grants, lamenting insufficient funds, or seeking foreign direct investment,” he said.
Liew called for a broader approach, suggesting the adoption of a flexible industrial policy framework, emphasising that it does not need to be fully fledged.
“As a trading nation with an open economy, we have limitations, but we must broaden our thinking to explore what tools we can utilise from the industrial policy toolbox.
“Secondly, we also will need to look at how to marry public funds and private funds. It is important that each of these investments shouldn't be just grant-based,” he added.
Malaysia’s first Edge AI system
The National E&E Forum also witnessed the signing of an MOU between Penang-based design companies Elliance Sdn Bhd and SkyeChip Sdn Bhd, as well as an MOU between Elliance, Kaltech Sdn Bhd, and Estek Automation Sdn Bhd, to jointly develop Malaysia’s first Edge AI system.
Edge AI involves the deployment of AI applications on devices in the physical world. The AI computation is performed near the user, at the edge of the network, close to where the data is located, rather than centrally in a cloud computing facility or private data centre.
“This partnership bears significant meaning for Malaysia, as it is the building block towards Malaysia’s first locally designed and manufactured Edge AI system, including Malaysia’s AI chip,” MSIA president Datuk Seri Wong Siew Hai commented.
“Many more Malaysian companies will be involved in different stages of development and production, which will bring more opportunities to them. The increased confidence that propagates throughout the local AI ecosystem will soon put Malaysia on the AI world map,” he added.
Malaysia is the world’s sixth largest exporter of electronics and semiconductors, and it plays a critical role in the global E&E supply chain.
For perspective, the country is responsible for 7% of semiconductor trade flows, as well as 13% of back-end operations globally, including chip testing and packaging.