This article first appeared in The Edge Malaysia Weekly on April 28, 2025 - May 4, 2025

IN a sector dominated by global heavyweights, Penang-based chip design firm SkyeChip Sdn Bhd knows it is still a bit player, a long way off from the established names.

But it is not without ambition. The homegrown company aspires to be the Broadcom of Malaysia, co-founder and chief technology officer Teh Chee Hak declares. To that end, SkyeChip is taking a page from the US semiconductor giant’s playbook of strategies.

“One day, we hope to be as big and as good as Broadcom. We believe the opportunity is huge. Getting there is a matter of how fast we can run. If we don’t run fast enough, someone else will catch up.

“But we also need to grow at a pace we can sustain,” he tells The Edge in an exclusive interview at SkyeChip’s office in Suntech @ Penang Cybercity, Bayan Lepas.

With a market capitalisation of US$831.82 billion (RM3.6 trillion), California-headquartered Broadcom Inc — helmed by Penang-born American business executive Tan Hock Eng — is a global chip giant known for designing, developing and supplying a wide range of semiconductors, enterprise software and security solutions.

A key example of Broadcom’s approach is its application-specific integrated circuit (ASIC) division, which builds custom chips for customers. Custom silicon, also known as ASICs, allows system vendors to create deeply differentiated solutions.

“They only have five or six major clients, but those clients contribute the bulk of their revenue. It’s easier to deal with a few large customers, and there’s more customer stickiness — you don’t have to constantly chase new business,” Teh observes.

He says the last thing SkyeChip wants is to complete a one-off project and then start looking for the next. “We prefer recurring business and long-term relationships. Again, Broadcom got it right. They’ve had Microsoft Corp and Meta Platforms Inc as clients for years — and they just focus on growing their competency.”

Teh points out that chip giants like Nvidia Corp and Intel Corp often target the mass market, which makes it difficult for newcomers to compete directly. “If I want to replace them, it’s tough — we don’t have that kind of reputation or resources. But look at OpenAI Inc. They started by using Nvidia graphics processing units (GPUs) to train their language models. But as they scale, they would reach a point of no return.”

Therefore, he points out, companies like OpenAI will have to build their own custom chips to extract more efficiency and reduce reliance on Nvidia. This presents an opportunity for integrated circuit (IC) designers like SkyeChip to help clients develop these custom chips.

“Broadcom and Marvell Technology Inc understand this too. They’re not going head-to-head with Nvidia, but instead gaining clients one by one. We’re adopting a similar strategy — offering something different rather than competing directly. This is where Malaysian chip design houses can find their niche.”

Teh, 48, has over 20 years of experience in the semiconductor industry. He spent the first 12 years of his career with Intel, working in various technical positions in Malaysia and the US on numerous intellectual property (IP) and microprocessor, chipset and system-on-chip (SoC) products.

A move to Altera Corp (now part of Intel) to work on field-programmable gate arrays led to his subsequent promotion to chief architect for Altera and Intel’s FPGA products.

Impressively, he holds more than 40 US patents with over a dozen publications worldwide. The Edge is given to understand that the patents are in his name but assigned to his previous company or SkyeChip. In other words, he does not hold any rights to any of the patents.

There are players in the local semiconductor industry who consider Teh a genius, but when asked, he says, “Thanks for the kind words, but I’m not a genius. I just had good opportunities to work with talented engineers.”

According to SkyeChip’s website, the company’s core team includes experts in their fields, who collective hold 102 US patents, including those filed by SkyeChip’s team during their time at previous companies.

SkyeChip specialises in developing IP and IC solutions for artificial intelligence (AI) and high-performance computing. Founded in 2019, the company was established by a team of seasoned engineers, many of whom previously worked at multinational corporations such as Intel, Altera, Broadcom, Spansion Inc and Motorola. On average, members of SkyeChip’s team have more than 15 years of industry experience.

“We had a small team of about 30 engineers, all friends who knew each other very well. Since then, we have grown year after year. Today, we have over 300 experienced IC designers. I would like to think that is quite an achievement for a young company like ours,” says Teh.

SkyeChip has in-depth technical expertise to develop advanced IP and ASIC products, encompassing architecture, micro-architecture, logic design, circuit design, custom layout and physical design.

Teh acknowledges that in his industry, companies have to grow fast and expand rapidly given the ultra-competitive environment. “We have more things we want to do than we are able to do at the moment. Given infinite resources, we would want to grow even faster. But at our current size, I think we can at least sustain and compete.”

A check with the Companies Commission of Malaysia shows that SkyeChip’s top five shareholders are co-founder and CEO Fong Swee Kiang, Teh, SKC Team 3 Sdn Bhd, Odyssey Vision Sdn Bhd and Meranti Asean Growth Fund II LP. However, their exact shareholding percentages are not disclosed.

SkyeChip reported a net profit of RM33.7 million, on revenue of RM77.06 million, in the financial year ended March 31, 2024.

It is an open secret that SkyeChip is exploring an initial public offering (IPO) on Bursa Malaysia, but when asked, Teh responds: “Unfortunately, I can’t comment on that.”

On March 12, Bloomberg reported that SkyeChip is considering an IPO in Malaysia as early as the second half of this year and targeting a share price that would value it at more than RM1 billion.

Oppstar Bhd (KL:OPPSTAR), SkyeChip’s closest local peer, is the first pure-play IC design house listed on Bursa Malaysia and was valued at a price-earnings ratio of 24.14 times when it made its debut on the ACE Market in March 2023.

A key strength of SkyeChip is its ability to develop advanced IP  and ASIC products.

“We don’t build generic products — we focus on custom ASICs, which are application-specific ICs designed for customers,” Teh explains.

A generic chip is like Intel’s central processing unit (CPU) — it can be plugged into any platform and run any software as it follows a standard instruction set that allows developers to write compatible code.

In contrast, a custom IC is made for a specific purpose. For example, an AI ASIC is built specifically for AI workloads.

“You can’t run general software on it — you need software developed specifically for that ASIC. If its purpose is image recognition, then that’s all it does — nothing more. Another example would be an optical transceiver. In data centres, you have optical cables going through converters — and you also need custom ASICs for those,” says Teh.

While some instruction sets may be similar, custom ICs usually include additional instructions that are not publicly available. Instead, they are built specifically for a customer’s own usage model, so they can run faster and more efficiently than their competitors. Generally, custom ICs are more expensive, but they are also more efficient and can operate on lower power.

Generic ICs, on the other hand, are directed at the mass market. But they come with a high upfront investment.

“You have to build the ecosystem — software, applications, partners. Otherwise, you could pour in money but nobody uses it. Generic works better in an established ecosystem. Custom ICs are more suitable for one-to-one use, but the value derived is often better,” Teh says.

SkyeChip started with custom IPs. Whether generic or custom, IPs are akin to building blocks for ASICs.

“Eventually, we built a portfolio of generic IPs too, but with our own differentiators. Generic IPs are governed by industry standards. Even custom ASIC design firms still buy IPs from others. But if everyone can do that, then there’s nothing to differentiate.

“What sets us apart is our IP portfolio. We specialise in memory interfaces and on-die data transport. These are the IPs we use to win customers. That’s our strength,” says Teh.

Another key difference is IP ownership. SkyeChip owns its own IPs, and the company files patents in the US, China and Malaysia concurrently. A patent is not the same as a chip — it could cover part of a chip or an IP.

In a smartphone, we have the USB connector, battery manager, screen and display — all controlled by a SoC. The SoC serves as the “brain” of the device. It coordinates inputs, manages resources and ensures that all subsystems — from sensors, cameras to touchscreens — function seamlessly together.  

“The SoC has a USB interface. When you plug in a charger, it signals the system to store power. IPs allow these systems to connect and communicate,” says The, who concedes that not all IPs are created equal.

“IPs built by us, or by companies like Cadence Design Systems Inc and Synopsys Inc, differ in performance — some better, some worse. The IPs will eventually form part of a chip.

“Realistically, no one can patent the entire chip, because parts of it will already be covered by someone else. What you can do is patent the chip’s concept or how it behaves.”

Building a chip design start-up from scratch is not an easy thing to do and Teh knows this first-hand. “The hurdles to becoming a chip designer are quite high. A lot has to line up for a start-up like ours to take off. You might have ideas — but execution depends on industry knowledge, access to design tools for analysis and, critically, access to foundries.”

Being fabless — meaning the company does not own or operate its own semiconductor fabrication plants — SkyeChip relies heavily on third-party foundries to manufacture its designs. But that relationship must first be earned.

“The challenge is whether the foundries see you as a credible company that could bring them business. That’s not easy. But we were lucky — we had credibility from prior experience, which helped open doors,” Teh says.

He points out that unlike software, which can sometimes be built by a single developer, IC design is a collaborative, multidisciplinary process requiring deep specialisation. “You can’t build an IC from scratch alone. It’s not like software, where one person can code something by themselves. IC design is broad and specialised — each part needs different skill sets. That’s why our first 30 people were all specialists in different areas.”

For companies that focus only on contract chip designing — essentially providing manpower — Teh notes that a small team can suffice. But not if you are creating your own IP and full custom ASICs.

SkyeChip typically runs four to five projects at a time. Smaller customers license the firm’s IPs, while larger ones engage the company to develop full-fledged ASICs. It also makes it a point to file seven to nine patents annually, depending on manpower availability and project activity.

Despite Malaysia’s smaller pool of engineering talent, Teh remains bullish on the calibre of local designers. “If you ask me, I think Malaysian chip designers are as good as foreign ones. If you compare our best talent to the best at Nvidia or Advanced Micro Devices Inc, I believe we’re on equal footing.

“Our main disadvantage is scale. Look at the number of graduates China or the US produces each year — Malaysia has far fewer. That limits our pace. But humans are humans. Whether you’re American, Chinese, Indian or Malaysian — it’s all the same.” 

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