Penang, Malaysia, is a hub for the semiconductor industry, aiming to develop IC design and local manufacturing.

2025/12/31

TechNews

December 22, 2025

Author: Central News Agency, Wu Sheng-hong

Penang, Malaysia, known as the "Silicon Valley of the East," has developed into Malaysia's semiconductor industry base over 50 years, transforming from an agricultural state into a leading state in cutting-edge technology. Penang Legislative Assembly Speaker, Lau Tze Kian, said that packaging and testing are Penang's strengths, while design accounts for a smaller proportion. Once the mid-to-late stages mature, the focus should shift "towards the front end."

Malaysian Prime Minister Anwar Ibrahim has stated that US chip giant Intel will invest an additional RM860 million (approximately NT$6.54 billion) in Malaysia, making it its packaging and testing center. This will further strengthen Malaysia's position in the global semiconductor supply chain.

In an interview with the Central News Agency, Penang Legislative Assembly Speaker Lau Tze Kien pointed out that the Penang Cross-Sea Power Project plays a crucial role in stabilizing the power supply, not only meeting current demand but also providing additional reserve power to cope with potential future growth.

Besides maintaining power stability, Lau stated that Penang is also expanding available land through reclamation and other methods to support industrial development, attract business investment, and further promote economic and industrial growth.

Starting in the 1970s, Malaysia first established a free industrial zone in Bayan Lepas, Penang, to develop it into a major center for semiconductor back-end packaging and testing. According to statistics, more than 50 semiconductor and chip manufacturers worldwide currently have factories in Malaysia, with a significant proportion located in Penang and Kulim.

Taiwanese conglomerate ASE Technology Holding Co., Ltd., through its subsidiary ASE Semiconductor, is actively expanding its presence in Malaysia. Its Penang plant, primarily located in the Bayan Lepas Free Industrial Zone, is ASE's largest global image sensor packaging and testing production line. 90% of its image sensor components are used in automotive electronics, while copper clip (CU Clip) packaging is used in automotive and sensor products.

Liu Zijian pointed out that Malaysia has already established a solid foundation in the packaging and testing supply chain. Looking ahead 10 to 20 years, Malaysia will further focus on the upstream semiconductor industry, actively developing IC design parks, demonstrating its ambition.

"From 'Made in Penang' to 'Made by Penang,' the latter is currently in its early stages, but we hope to catch up," said Liu Zijian. He explained that packaging and testing are Penang's strengths, while design accounts for a smaller proportion. He emphasized that industrial development cannot be unbalanced; since the mid-to-back-end segments are mature, the focus should be on "extending forward."

Liu Zijian pointed out that under this blueprint, Penang has successively launched IC design-related projects. Currently, Penang has the most IC companies among Malaysian states, making it an indispensable stepping stone for many advanced process companies seeking overseas expansion. However, Penang's ambitions extend beyond this; "We also hope to reach the forefront of the industry."

Huang Huiling, President of the Penang Taiwanese Chamber of Commerce, told the Central News Agency that Malaysia has a relatively mature semiconductor packaging and testing supply chain, holding a significant position in the entire semiconductor manufacturing process. Malaysia is the world's sixth-largest semiconductor exporter, with its strength lying in downstream packaging and testing, boasting a 13% global market share. Penang, known as the "Silicon Valley of the East," accounts for 5% of global semiconductor sales.

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