Raising the level of Penang’s E&E cluster

  • Closer cooperation and less competition the way to grow into one of the world’s top clusters
  • Circulation of up to 30% of talent pool annually between E&E players helps spread ideas

INTEL Corp has been in Penang for such a long time, 41 years, that it is easy to take its presence for granted. Yet, it is useful to remind ourselves of the impact it has on the island from an employment perspective, and the impact on Malaysia as a knowledge economy.
It employs around 9,000 people directly, with at least twice that number from the companies that serve it from a corporate services point and from a design point.
Meanwhile, the high value work it does out of Malaysia has also helped position the country as an emerging knowledge economy. Intel’s design organisation does validation, world-class design work on microprocessors, and writes manufacturing tests for its other factories around the world. Mind you, this started 20 years ago.
Raising the level of Penang’s E&E clusterIts manufacturing organisation is one of the leading sites for assembly and testing and engineering, while in shared services, Malaysia hosts one of the largest back-office operations for Intel in finance, purchasing and human resources that services Asia and Europe.
“In short, what we have here in Penang compares favourably with any other of our sites in the world,” says Christopher Kelly (pic), general manager, IAG (Intel Architecture Group) Malaysia, Intel Microelectronics (M) Sdn Bhd.
So is everything peachy? Of course not. There is always room for improvement and for a company that depends on talent as its lifeblood, Kelly naturally zooms in on this when asked what he wished for.
“I wish the universities here would open up their curricula and work with other world-class universities to get theirs to world-class level. I know they can do a lot better. The capacity and capability is definitely there,” he says.
Intel has been doing its part for over 20 years through various courses it works with the universities to introduce, while matching the universities with its suppliers to ensure the students work on real problems and use current tools.
Kelly also has another wish, a somewhat surprising one: That the companies in the entire E&E (electronics and electrical) cluster in Penang put aside their competitive spirit towards each other and collaborate instead to raise the standard of the entire industry to be on par with the likes of the leading E&E clusters in the world in Austin, Texas; Silicon Valley in California; Bangalore, India; and Munich, Germany.
“Look at how Bangalore burst onto the scene and passed us by. It was because of their sense of cooperation. We need to do that too,” he says.
“In that sense, the Collaborative Research in Engineering, Science and Technology (CREST) is a fantastic vehicle for that,” he adds.
Besides aiming to foster an R&D (research and development) culture in the E&E sector, CREST aims to bring academia, industry and government together in a partnership bound by a common goal of furthering the advancement of the E&E cluster.
Kelly for one, wants to see more local design services companies located here as the demands of companies like Intel have gotten more sophisticated and it needs to partner with higher value-add suppliers.
“You don’t just want to rely on the multinationals here. You need to build local capacity,” he says, sharing his observation that somehow the entrepreneurial drive among Malaysians in the E&E cluster has slowed.
“It was good in the 1980s to 1990s, but slipped a bit in the 1990s and early 2000s as not many entrepreneurs were coming out into the sector from their MNC (multinational corporation) jobs. It was almost as if they felt the opportunity had passed them by.”
However, Kelly feels there are still plenty of opportunities in the cluster and would like to see that entrepreneurial spirit back, with individuals excited to be in this cluster and wanting to make things happen.
While you would think that MNCs like stability in their workforce with little or no attrition, Kelly on the other hand feels that a higher degree of movement back and forth of people and ideas among the E&E cluster is “extremely healthy.”
“I am not scared of that because this movement of people in three- or four-year cycles actually ends up making all the companies better. I have seen this in Bangalore,” he says.
It is not just the cluster that gets better but this movement attracts new investments too. New companies that burst onto the scene see this movement of people and ideas being developed and want to locate to the cluster.
“My hope is that we can all cooperate here and that Penang can eventually be seen as among the great clusters,” says Kelly.
But isn’t this healthy circulation of talent within the cluster blocked by the unsaid agreement the MNCs are said to have in Penang of not pinching staff from each other?
“I can tell you that is categorically not true,” says Kelly. He believes that this actually harms the development of the cluster, “because people get stuck in one place, in the same job. There is no personal and professional development. And really, the cluster is affected too.”
For Intel in Malaysia, the challenge over the next 10-20 years is that what it is doing is good, but won’t be good enough. To deal with this, the company is trying to hire a higher proportion of engineers with Master’s and PhDs. It currently has about 400 Masters and PhD holders in total within the 3,000 engineers it has.
“We are trying to encourage students to stay in school longer because we find that they are able to do better and lead their teams better too once they get into Intel with this higher education training,” says Kelly.
Here though Intel is coming up against a Malaysian cultural hurdle. While there are various graduate training scholarships that keep undergrads in school to pursue a higher degree in the United States, Kelly notes that here, “there is more pressure to get that BSc and to go get a job immediately.”
Despite this hurdle, Intel is working with CREST on a graduate scholarship programme for promising kids to keep them in university longer. He is naturally hoping they will choose Intel when they get into the cluster.
Related Stories:
Malaysia’s edge is in quality workforce … and English: Intel
E&E sector undergoing transformation in Northern Corridor
Looking to build the E&E ecosystem
CREST: Latest govt initiative to spur R&D
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