Yes, It’s Now Time for Local SMEs in E&E to do R&D

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AFTER THREE DECADES helming various engineering divisions at Motorola, Intel and Freescale Semiconductor, Kalai Selvan Subramaniam remains ready to challenge himself further. In November 2016 he co-founded Infinecs Systems, of which he is also the CEO, together with another investor. The Penang-based SME has two focus areas – as an engineering, research and development (ER&D) services provider and as a product technology developer.

The company has since then cemented itself in the electronics design and development industry, with more than 80 design engineers working for it.

“Establishing Infinecs Systems felt like a natural progression for me. I am passionate about organising teams from the ground up. When I first graduated, I spent two years on secondment to the Integrated Circuit (IC) design team at Motorola’s semiconductor plant in Austin, Texas, and was expected to set up an IC design centre for their Malaysian plant as well upon my return. But the decision was reversed by the corporate HQ.” Still, Kalai continued to support the US design team, while pursuing his Master’s degree in engineering at Universiti Teknologi Malaysia. “Years later, I joined Intel and was asked to establish and lead an engineering team in performing silicon validation activities on network processor-based SOC products. As head of the Low-Power Embedded Productions division, I also led the team in developing a framework to enable intellectual property reuse and modular SOC development,” he says.

Kalai Selvan Subramaniam. Photo: Emilia Ismail.

The exposure gained from working for Fortune Global 500 companies provided Kalai with knowledge and insight to better understand clients’ requirements and expectations. “The work methods from my experience were important for setting up Infinecs Systems’ internal processes and workflows. But the most important aspect was the network of contacts I had built; through my network, I received a lot of encouragement, obtained business opportunities, met partners and recruited employees,” he says.

Besides running a successful start-up, Kalai is also active in various professional associations. A former chairman of the Malaysian Integrated Chip Designer Association (MICDA), he is currently involved in various committees dedicated to developing the national E&E sector and is a senior member of the Institute of Electrical and Electronics Engineers. An advocate for technical talent development, Kalai regularly conducts talks at schools, universities and conferences as well. “These interactions have provided the opportunity to identify much needed changes to drive the next stage of growth for the E&E sector in Malaysia. This is a fiercely volatile domain. The trade war between the US and China has sparked conversations on the challenges that local SMEs in the E&E sector are facing.”

Hopes for a comprehensive US-China trade deal may be low at present; special investment advisor to the chief minister Dato’ Seri Lee Kah Choon has mooted various initiatives to revitalise the highly important E&E sector: its contribution to the overall health of the country’s economy exceeded its 5.4% share of GDP in 2018 (RM83bil out of a RM1.4tril economy).1

Perhaps a more accurate question to ask is: “How is the government supporting SMEs that are engaged in R&D in the E&E sector?” A way forward would be for the government and government-linked companies to prioritise local technology content, as an avenue for local R&D companies to participate in various national projects. “In the 1980s, even as Malaysia attracted the likes of Intel, Hewlett Packard, Motorola, Siemens, Hitachi, Sony and other industry giants, there were measures put in place to develop SMEs in the manufacturing sector. These may have started off as vendors to the MNCs, but they have grown today into listed entities, with the capability to develop their own products and venture into new overseas markets. We need a similar approach for the R&D SMEs. Such a policy would enable us to collaborate with first-tier MNCs, be involved in cutting-edge R&D activities, and cultivate world-class technical talent,” he says.

Seeking Talents

Kalai and his engineering team in Intel. Photo: Emilia Ismail.

“It is difficult to find people with the right expertise. Being an R&D start-up, we are confronted with twin challenges. On one hand, the sector has a limited pool of experienced local engineers. Most of them are attached to the MNCs because these offer more attractive salaries, benefits and perks. To fill the gap, we are dependent on the recruitment of experienced expatriates instead. On the other hand, we have to also contend with the quality of fresh engineers during the recruitment process. Stronger candidates tend to gravitate towards MNCs and larger competitors. As a result, we have to recruit and intensively train our graduate trainee engineers before they are able to productively support our clients. This requires a huge investment of time and effort,” says Kalai.

In spite of this, the time has never been riper for an entrepreneurial culture to develop locally. “Historically, the top engineering talent were hired by MNCs operating in Malaysia. Besides a compelling career path, good salary and other benefits, employees were provided the opportunity to travel abroad for assignments. But times have changed. The competitive nature of the manufacturing sector has contributed to lower margins, leading to shrinking benefits and capped salary growths. A combination of all these factors has made the conventional career path less attractive. These changes are creating an opportune moment for the local entrepreneurial culture to develop. I think it would be exciting to see more people joining or setting up start-ups. With the right level of support and coordination from the government, start-ups can drive growth for the E&E sector in Malaysia.”




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