Intel’s US$7 bil Penang investment will compel Malaysia's semiconductor ecosystem to level up

  • Initial US$320k investment [in late 70’s] grew to US$5.9 bil, and now add US$7 bil 
  • Ecosystem step up to match tech investment will enhance value chain participation 

Speaking in KL, Pat Gelsinger, Intel CEO said: “Intel’s initial investment of US$382,000 [back in the late 70’s] has grown to over US$5.98 billion from once a very small memory chip facility plant to one of Intel’s most complex assembly test manufacturing and R&D sites in the world.”

 

It is the story of the year for Malaysia’s tech ecosystem. Intel Corporation US$7.1 billion (RM30 billion) investment into Malaysia, spread over 10 years, sent a jolt of excitement through the ecosystem and has the both Penang State and Federal government doing a delighted jig with each crowing about how the investment proves that state/country are globally competitive, have world class infrastructure, consistently deliver pro-business policies that attract world class companies, while churning out top class talent.

Pat Gelsinger, was excited as well. At a press conference on Dec 16 in Kuala Lumpur, the CEO of Intel said, “Intel’s initial investment of US$320,000 (RM1.6 million) [back in the late 70’s] has grown to over US$5.98 billion (RM25 billion) from once a very small memory chip facility plant to one of Intel’s most complex assembly test manufacturing and R&D sites in the world.”

[RM1 = US$0.239]

But what does Malaysia’s semiconductor ecosystem think? What does the university that sits at the heart of Malaysia’s Silicon Valley of the East, University Sains Malaysia (USM), feel about the impact of this invesment? And what does the government agency that was set up almost 10 years ago, Centre for Research in Engineering, Science and Technology (CREST), whose raison d’etre is to bring academia, industry and business together, feel about the impact of this decision?

In a nutshell, all three are delighted, but are also aware of the high expectations that have to be met, not just by Malaysia but from Intel as well.

Intel’s US$7 bil Penang investment will compel Malaysia's semiconductor ecosystem to level up“We are of the hope that Intel will increase its interactions by hosting new firms through incubation programs. That it will invest on a bigger scale in technology startups and to fortify its investment further in research and development and innovation,” expresses Jaffri Ibrahim (pic), CEO of CREST.

Echoing the thoughts of various industry leaders, Jaffri expects a massive boost in Malaysia’s capabilities in moving up the value chain of technology transfer whilst strengthening the country’s position in the global semiconductor supply chain.

Meanwhile, nobody in Malaysia has a keener appreciation, nor been more deeply involved in Malaysia’s quiet growth into becoming a key component of this semiconductor value chain than Wong Siew Hai (pic, right).

Intel’s US$7 bil Penang investment will compel Malaysia's semiconductor ecosystem to level upA 27 year career of distinction with Intel saw him rise to Vice President of Technology and Manufacturing Group and General Manager of Assembly and Test Manufacturing. These were not Malaysian centric roles. Wong was responsible for all Intel assembly test factories worldwide.

His contributions expanded to the national level on his retirement from Intel with leadership and advisory roles in both public and private bodies, too numerous to list. But his most recent is also becoming his most important, in light of Malaysia’s recognized importance in the semiconductor value chain. Wong was instrumental in helping to establish the Malaysia Semiconductor Industry Association (MSIA) in Jan 2021, and serves as its president. He has quickly become the face of Malaysia’s semiconductor sector, sought out regularly by local, regional and global media for comments on industry issues.

 

Four facets of the Intel investment

On a macro level, four things stand out to Wong about the Intel investment. “It reinforces Malaysia’s role as a critical global semiconductor hub and enhances Penang’s status as the Silicon Valley of the East, with the likes of AMD, Lam Research, Micron and others in Penang as well. And, I think it also speaks volumes for the employees of Intel in Malaysia.”

He highlights the fact that they have consistently delivered performances that have powered Intel’s growth – for nearly 50 years. “I definitely think the employees should be very proud of themselves.”

Intel’s Gelsinger, concurs. “Ultimately, Malaysia has been and will continue to be a critical location for Intel in almost every dimension of our business. I am so proud of our employees that are here in Malaysia, 13,000 strong and growing.”

The fourth indicator the investment signals is that, “It further demonstrates Malaysia as a business friendly government willing to work with industry to improve the ease of business, making Malaysia more competitive.”

 

USM and the talent draw attracting investments into Malaysia

Intel’s US$7 bil Penang investment will compel Malaysia's semiconductor ecosystem to level upProf Rafiq Adikan (pic), vice chancellor of USM is acutely aware of the role his institution plays in ensuring, Malaysia and Penang remain globally competitive. Asked how the Intel investment will influence USM strategy for the near future, he explains that the university is well aware that talent is one of the largest draws that will determine more investments into the country.

“USM sees herself as part of the larger conversation surrounding nation building. In light of this, USM has begun increasing the number of places for science and technology courses since 2019. For example, some engineering courses saw a 50% increase in undergraduate places. In addition, USM introduced the USM+1 entry channel - places offered over and above the ones pledged to the Government via the UPU intake.”

USM+1 caters for locals who are willing to pay premium fees for USM courses. To cater to the larger student intake, the university has gotten into the gig-economy itself, he says. “Our hiring saw an addition of more than 100 industrial and academic fellows in a year, from more than 20 countries, mainly to cater for teaching and research, ensuring up to date content and a diverse learning experience.”

This led to a massive increase in international undergraduate and postgraduate intake, being ranked 1st among all public and private universities in terms of international student intake, in 2020 and 2021, despite the Covid19 related challenges.

“This will further boost the supply of talented graduates that will help support the business ecosystem,” he adds.

He also expects a ripple effect from the estimated over 4,000 new jobs Intel’s investment will create with an increase in demand for upskilling/reskilling and professional courses. “We believe there will be an exponential increase in those seeking cross-disciplinary training, for example engineers pursuing business analytics and administration.”

To this end, USM has partnered with a number of establishments including Digital Penang, ThinkCity, and others.

Rafiq also points to a new platform called [email protected] to allow for practitioners to offer USM-reviewed content while its [email protected] and I2U buildings are testaments of her commitment, “in forging strong industry-academia ties where almost all tenants are companies that work closely with USM researchers and academics,” says Rafiq.

[Ed: A beta version of the [email protected] has just been made available for testing by the general public. The advantage of this platform is the courses offered are vetted and approved by experts from USM and invited industry players.] 

While bringing industry-academia together is Crest’s forte, Jaffri shares that its strategy, moving forward, “includes fortifying our talent development efforts to facilitate the cultivation of a highly skilled pipeline of tech talent, in addition to nurturing a workforce that is ready for an increasingly digital world.”

 

“Everybody will have to keep up”

The expansion of Intel’s assembly test manufacturing, while also building out die prep capability with the addition of advanced packaging capabilities in Malaysia is expected to help ignite the growth of the high-tech ecosystem, not just in Penang, but throughout Malaysia.

“Everybody will have to keep up with the new technology that Intel plans to introduce,” says Wong. Small and Medium Enterprises (SMEs) will likely even need to retool to support the new investments.

Companies offering engineering services will also have to learn new skills. “Because the equipment will be different, processes will be different, everything will be different.”

The MSIA welcomes this uplifting of the services sector, Wong says as one of its objectives is to encourage more companies to go up the value chain and into design and development. “So, if Intel outsources some development work out, then our companies have a chance to go into design and development at a higher technology level.”

The end result is that Intel’s new investments into Malaysia will literally force many parts of the semiconductor ecosystem to go up the value chain, including into design and this step up will likely be worth as much as Intel’s RM30 billion investment.

 

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