Penang’s Semiconductor Crossroads: Navigating Global Trends and Industrial Upgrading

THE WORLD SEMICONDUCTOR TRADE STATISTICS (WSTS) forecasts 16% year-on-year growth for the global semiconductor market in 2024, with the Asia Pacific region growing by 17.5%.^[1] This robust market expansion is led by the demand for advanced processing to power artificial intelligence applications across data centres and consumer devices.^[2]

Malaysian electronics and electrical (E&E) firms are projecting continued confidence in their performance for the second half of 2024.^[3] Penang, in particular, has emerged as a key player in this global semiconductor boom. The state’s strategic location, skilled workforce and favourable investment climate have attracted numerous multinational corporations to set up their operations here.

Although Penang plays a vital role in the global electronics supply chain, a significant portion of the value creation happens elsewhere. Penang specialises in the assembly and testing of semiconductor chips, commonly known as outsourcing semiconductor assembly and test (OSAT) services. While these have been perceived as a lower-value segment, they provide a strong foundation for future growth in the semiconductor industry, especially with the demand for advanced packaging solutions increasing.