Malaysia’s semiconductor role is built less around making the world’s most advanced general-purpose processors and more around power chips, advanced packaging, testing and a deep manufacturing network. Infineon’s Kulim project adds large-scale silicon-carbide (SiC) power-chip production; a new SPIL project in Penang expands advanced packaging and testing; and national programmes aim to grow local chip-design skills.
What kind of chips are made in Malaysia?
Malaysia’s semiconductor activity spans several stages of production, but its strongest established position is in assembly, testing and packaging. The country is also developing more specialised wafer fabrication and is trying to build local capacity in integrated-circuit (IC) design.
- Power semiconductors: Infineon’s Kulim campus makes power devices, including silicon-carbide chips, and its expanded facility includes gallium-nitride (GaN) epitaxy. These technologies are designed to manage electrical power efficiently, rather than perform the general-purpose computing of a CPU or GPU.
- Packaging and testing: Penang’s semiconductor operations include assembly and test, with new investment in wafer bumping, wafer-level packaging, flip-chip packaging and testing.
- Logic and processor production: Intel has assembly, test, advanced packaging and design activity in Penang and Kulim. That does not mean Malaysia is a leading-edge logic foundry hub; the cited Intel operations show an important role in the broader product and supply chain, not necessarily fabrication of the latest processor logic nodes there.
“Foundry” can mean a company that fabricates chips designed by another company. In a broader discussion of semiconductor manufacturing, it is also sometimes used loosely for any chip-fabrication plant. Malaysia has wafer-fabrication investment, particularly in power semiconductors, but the evidence here does not establish a domestic cluster of leading-edge logic foundries comparable to those making the most advanced processors elsewhere.
How do Kulim and Penang differ?
The two locations illustrate Malaysia’s complementary niches: Kulim is adding front-end power-device fabrication, while Penang is strengthening backend manufacturing and advanced packaging.
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| Location and project | Main specialty | Scale and employment | What it adds |
|---|---|---|---|
| Kulim, Infineon | 200 mm SiC power-semiconductor fabrication, with GaN epitaxy included in the facility expansion | Infineon said the first phase, opened on 8 August 2024, represented €2 billion. The company said a second phase could involve up to €5 billion more, bringing the project to as much as €7 billion overall and up to 4,000 jobs. | More wafer fabrication in Malaysia for power devices used in electrification and other high-power applications. |
| Penang, SPIL | Advanced packaging and testing, including wafer bumping, wafer-level packaging and flip-chip packaging | MIDA and SPIL described the project in 2024 as an RM6 billion facility expected to create nearly 3,000 skilled jobs over 15 years. | More capacity to turn processed wafers and chips into packaged, tested components for customers. |
The figures describe different things: Infineon’s €2 billion is the first phase already opened, while the additional €5 billion is a possible second phase; the €7 billion total is therefore a maximum project scale, not a claim that the full amount has already been spent. SPIL’s jobs figure is a 15-year projection, not an immediate headcount.
Why do SiC and GaN matter commercially?
Silicon carbide and gallium nitride are wide-bandgap semiconductor materials. Their properties make them useful in power electronics that need to handle high voltages, heat or switching frequencies efficiently. They do a different job from the logic chips that execute software, but they can be essential to the systems those chips run inside.
Applications include electric vehicles and charging equipment, trains, renewable-energy systems, fast chargers and AI data centres. Those uses create demand for components that convert and control power efficiently. Infineon’s CEO Jochen Hanebeck said in August 2024 that newer power semiconductors such as SiC are “an absolute prerequisite to achieving decarbonization and climate protection.” The business case is not that every electronic product needs SiC or GaN; it is that power-intensive systems can benefit when the device’s efficiency, temperature handling and performance justify its cost.
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Why are Intel, Infineon and SPIL investing in Malaysia?
Each company’s investment fits a different point in the semiconductor value chain. Infineon is expanding specialised power-device fabrication. SPIL is adding packaging and test capacity. Intel’s existing footprint combines manufacturing operations, assembly, testing, advanced packaging and design work. Together, these activities offer customers multiple production and support capabilities in one established electronics ecosystem.
Intel executive vice president and chief global operations officer Keyvan Esfarjani described Malaysia in 2024 as “a very, very critical location in Intel’s supply chain,” citing manufacturing, assembly, testing and design. The company also announced $7 billion in new Penang facilities in 2024, including advanced packaging. That is a reported investment announcement for the facilities; it should not be confused with an amount already fully deployed.
Malaysia’s existing supplier base is another draw. In 2025, MIDA’s supplier programme connected Malaysian companies with Micron, ASML and Ferrotec. These links can help local suppliers qualify for work in a complex global industry, although supplier introductions alone do not establish how much new business or technology transfer will result.
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Is Malaysia moving beyond chip assembly?
Yes, but the shift is uneven and still in progress. Penang and Kulim already support more than basic assembly: Intel’s activities include testing and advanced packaging, and Infineon’s Kulim fab represents substantial wafer fabrication for specialised power semiconductors. At the same time, Malaysia is trying to add higher-value design and fabrication capabilities to an ecosystem whose strength has historically been backend manufacturing.
The scale of the existing base is visible in Malaysia’s 2024 investment figures. MIDA’s announcement for SEMICON SEA 2025 reported RM120.5 billion in manufacturing investment during 2024, including RM55.8 billion in electrical and electronics (E&E), and said those investments were expected to generate 88,000 high-skilled jobs. These are countrywide manufacturing and E&E figures, not semiconductor-only totals, and the jobs are expected rather than confirmed hires.
InvestPenang reported in 2024 that Malaysia had a 13% share of global semiconductor assembly, testing and packaging. That figure underscores the scale of the backend base; it does not measure the country’s share of chip design or wafer fabrication.
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What is Malaysia’s plan for chip design and other higher-value work?
Malaysia’s National Semiconductor Strategy (NSS) covers IC design, wafer fabrication, advanced packaging and specialty chemicals. Its ambition is to strengthen more of the value chain, not to abandon manufacturing strengths that already attract global companies.
One concrete talent initiative is MIDA’s 2025 agreement with ARM, which is intended to train 10,000 Malaysian IC-design engineers and help local firms move from backend manufacturing toward design. This is a planned training target, not a count of engineers already trained or employed in design roles.
A 2024 TIME report described the NSS as a three-phase strategy with a $5.3 billion investment figure and a target of training 60,000 engineers. These reported programme figures are distinct from MIDA’s later, specific 10,000-engineer ARM agreement; the available announcements do not establish that the two training numbers use the same scope or refer to the same programme.
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The policy challenge is execution: design capability needs skilled people, experienced teams, customers and local firms able to take on demanding work. Malaysian Minister of Investment, Trade and Industry Zafrul Abdul Aziz told TIME in 2024, “We’re not doing enough in IC design and wafer fabrication, because this is where the value-add is.” The NSS and ARM initiative address that gap, but announcements and targets are not proof that the value chain has already shifted.
What Malaysia’s semiconductor niche means for the global chip supply chain
Malaysia is best understood as a complement to leading-edge foundry centres, not as a direct substitute for them. Advanced packaging, testing, power devices and supplier integration are strategically important even when they are not the newest logic process. Chips must be packaged, tested and incorporated into reliable products; electric vehicles, renewable-energy equipment and data centres also need efficient power control as well as computing silicon.
For customers, a concentrated base of suppliers and production skills can support resilience and shorten coordination across manufacturing stages. For Malaysia, the opportunity is to convert its strong backend position into more fabrication, design and locally owned supplier capability. Whether that becomes a durable upgrade depends on delivering projects, developing talent and winning sustained customer work—not simply on announced investment totals.
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