The chip war between the United States and China has been going on for several years. America restricts access to chips and imposes high tariffs on products imported from China. China, in turn, began limiting access to key raw materials such as gallium in response. While pandas and bald eagles are fighting each other, Malayan tigers who are stuck between these two superpowers are reaping the benefits.
According to a Financial Times report, Malaysia has become the destination of choice for chip companies and those involved in the semiconductor industry due to the rivalry between America and China. Companies such as Micron, Intel AMS Osram, Infineon, and Fengshi Metal Technology increased their investment in Penang because they see Malaysia as a friendly destination for both countries. There are reports of employees of these companies being tempted by salary increases of up to 30% to move.
Last year Penang recorded foreign direct investment (FDI) of more than RM60 billion which is greater than the combined FDI between 2013 and 2020. Penang has a pedigree as a chip production center since 50 years ago with the opening of the Intel factory in Bayan Lepas. Many must have seen the "made in Malaysia" stamp on every Intel chip released.
So far, Malaysia has only been a location for the production of second-class chips that are not very sophisticated. But with many companies looking for alternative production locations to China, Malaysia is in the best position to become a first-class chip manufacturing center in the Southeast Asian region. In fact, the closure of automotive chip factories in Malaysia due to the pandemic caused global car production to be severely affected.
Intel has already announced a RM30 billion investment in Malaysia's semiconductor industry in 2021 when CEO Pat Gelsinger visited Penang. Micron has just opened the latest assembly and testing center in Batu Kawan. In this situation it is clear that when the panda and the eagle scratch, the Malayan tiger relaxes in the middle of waiting for the result of the match while enjoying the surr kandar rice.