Investment Review 2024: Malaysia's E&E Sector Absorbs Intel's US$7 Billion and Infineon's RM25 Billion as Exports Climb to RM491 Billion in Ten Months
In 2024, the electrical and electronics (E&E) sector of Malaysia paired steady export growth with the largest investment commitments in recent memory: Intel's US$7 billion (RM31.3 billion) advanced packaging project in Penang and Infineon's RM25 billion fabrication expansion. The National Semiconductor Strategy (NSS), unveiled in May with RM25 billion in targeted incentives, moved from announcement to implementation, while Budget 2025 left industry players arguing over allocation details. E&E exports climbed from RM134 billion in the first quarter to RM156 billion in the third, reaching RM491 billion in January–October, up 1.5% year on year, and approved sector investments of RM47 billion in January–September accounted for 53% of all manufacturing approvals. This review examines where the money came from, where it is going, and what stands between ambition and execution.
2024 in review: two halves on the stock market, steady growth in the real sector
KUALA LUMPUR, December 30, 2024 — The year-end assessment of the Malaysian semiconductor industry splits neatly into a market story and a production story, and the two did not move in step. On the stock market, 2024 was a tale of two halves. In the first six months, technology shares generally delivered positive returns, driven by the artificial intelligence boom sparked by US chipmaker Nvidia, increased investment in advanced technologies and the optimism surrounding the launch of the National Semiconductor Strategy. Outsourced semiconductor assembly and test (OSAT) firms Inari Amertron Bhd and Malaysian Pacific Industries Bhd logged notable gains of 24% and 38% respectively in the first half of the year.
That did not last. Many tech stocks entered a correction in the second half, rattled by macroeconomic concerns, persistent trade tensions, a stronger ringgit and softer global consumer demand, all of which weighed on the sector's earnings prospects. Inari's stock declined 17% and Malaysian Pacific Industries experienced a steeper drop of 35% during the period. On a year-to-date basis the divergence became clear: some companies remained in positive territory, while others ended the year in losses.
The real economy told a calmer story. Despite the share-price fluctuations, the semiconductor sector continued to expand in market size, supported by substantial foreign direct investment and positive business sentiment. According to the Malaysia Semiconductor Industry Association (MSIA), 53% of companies in the E&E and semiconductor sectors expressed optimism about their business prospects for the fourth quarter of 2024. MSIA president Datuk Seri Wong Siew Hai is reluctant to describe the year as one of two halves at all: using E&E exports as the industry's barometer, he argues, the sector performed steadily throughout the year without a significant divergence between the first and second halves — a year he characterises as remarkable for consistent growth.
Anchor commitments: Intel's US$7 billion, Infineon's RM25 billion and the data-centre wave
The investment headline of 2024 belonged to global technology giants demonstrating confidence in the country's role in the semiconductor supply chain. US chip manufacturer Intel Corp committed US$7 billion (RM31.3 billion) to advanced packaging facilities in Penang, extending a presence that already makes the state the heart of Malaysia's back-end industry. Germany's largest semiconductor manufacturer, Infineon Technologies AG, pledged RM25 billion to expand its fabrication capacity — one of the largest single commitments ever recorded in the national power and discrete device segment. Alongside the two chip anchors, Google, Microsoft and Oracle announced billion-dollar plans to set up data-centre and cloud facilities in the country, widening the investment base beyond manufacturing into digital infrastructure.
The combination matters analytically. Advanced packaging sits at the centre of the current AI hardware cycle, where high-bandwidth memory and chiplet architectures make packaging capacity a strategic bottleneck; fabrication expansion, in turn, moves the industry beyond its historical assembly-and-test specialisation. Datuk Seri Lai Pin Yong, founder of BlueChip VC Sdn Bhd and a former Intel semiconductor executive, notes that the global semiconductor landscape is evolving rapidly and that without scaling the supply chain into higher-value areas — integrated circuit (IC) design, artificial intelligence and advanced packaging — the country risks being outpaced by other Asian nations. He also frames 2024 geopolitically: intensifying technology tensions between the United States and China, coupled with the decoupling of global supply chains, present a rare and significant opportunity for a neutral player with a reputation for political stability and balanced diplomacy. In his formulation, the NSS arrived both timely and necessary, but its success will depend on timely execution, strategic collaboration and the ability to close gaps in talent, infrastructure and innovation.
Why timing dominates the global subsidy race
The competitive backdrop to these commitments is a worldwide subsidy race. Wong points out that many countries — the United States, China, Taiwan, South Korea and Japan — have announced equally ambitious plans to strengthen their own semiconductor ecosystems, so timing is everything. His reading of 2024 is that this is a once-in-a-generation opportunity: the industry sits at an inflection point where Malaysia can leapfrog competitors and emerge stronger as a top-three semiconductor nation. Semiconductors, he argues, are the new oil and can and should become the country's future engine of growth — an industry that over the past fifty years grew by leaps and bounds without much government intervention, and that now, with the whole-of-nation approach galvanised, can capture an immense market. The message to policymakers is that the opportunity window belongs to those who move quickly in all areas: work harder, faster and smarter to stay ahead of the competition.
The National Semiconductor Strategy: RM25 billion in incentives under scrutiny
The policy core of the year was the National Semiconductor Strategy, unveiled at SEMICON Southeast Asia 2024 on May 28. The NSS outlines five ambitious headline targets as part of a road map to position Malaysia as a key player in the global semiconductor industry. Spanning three phases over the next decade, the strategy aims to drive growth, innovation and long-term competitiveness in the sector. To kick-start implementation, the government allocated RM25 billion in targeted incentives under the NSS — the largest dedicated semiconductor support package in the country's history.
The strategy's first test came quickly. Following the announcement of Budget 2025 in October, reactions from industry players were mixed. Some industry leaders believe the government is taking a meaningful step towards strengthening the country's role in the global semiconductor supply chain. Others raised concerns about the lack of clarity on how the previously announced RM25 billion allocation would actually be distributed: which activities qualify, over what horizon the money is spread, and how co-investment by companies is expected to work. The dispute is less about the sum than about the mechanics — a decade-long, three-phase road map requires an incentive schedule that investors can underwrite, and 2024 ended with that schedule still being argued over.
What industry leaders want the strategy to become
ViTrox Corp Bhd co-founder and president Datuk Chu Jenn Weng believes the NSS goals are attainable if there are cohesive efforts to strengthen the local semiconductor ecosystem through innovative policies, incentives and co-investment in talent-pipeline and technology development. Compared with leading global firms in the OSAT and automated test equipment (ATE) sectors, he observes, Malaysian companies still need to become more prominent in terms of revenue and profits; the strategy should therefore focus on supporting them to move up the value chain and compete in emerging areas such as advanced packaging and artificial intelligence. Collaboration and joint ventures with leading global semiconductor companies, in his view, could be a strategic and effective approach to accelerating the ecosystem.
Oppstar Bhd co-founder and joint CEO Cheah Hun Wah stresses that semiconductors have become a strategic resource in today's world. Many major countries — the United States, China, Japan, Germany, South Korea and India — are looking to support their semiconductor industries aggressively, while developing economies such as Vietnam and India are jumping in. To retain relevance against both leading nations and hungry developing ones, he argues, the NSS is needed; if the country does not raise its game, others will and it will be left behind. On feasibility he is candid: to many industry veterans the goals look far-fetched, but not impossible, and the goalposts may need continued fine-tuning as strengths and shortcomings become clear. He also warns against trend-chasing — first smartphones, then the Internet of Things, Industry 4.0 and 5G, now artificial intelligence — urging instead long-term capability building across design, fabrication, advanced packaging and end-user solutions so that the industry is prepared for future technological waves rather than the current one.
The export trajectory: RM134 billion, RM148 billion, RM156 billion
The trade data underpinning Wong's steady-growth reading shows a consistent quarter-on-quarter ascent through the year:
- first quarter of 2024 — E&E exports of RM134 billion;
- second quarter — RM148 billion;
- third quarter — RM156 billion;
- January–October total — RM491 billion, a 1.5% increase from RM484 billion in the same period a year earlier.
The quarterly sequence illustrates a steady upward trend rather than a boom: each quarter added between RM8 billion and RM14 billion over the previous one. The year-on-year comparison is more modest — a 1.5% increase over ten months — because 2023 was itself a strong base, but the direction of travel never reversed, even as the stronger ringgit and softer consumer demand pressured share prices in the second half. Wong is hopeful that the sector will breach RM600 billion for the full year, which would mark the highest export figure ever achieved by the industry in Malaysia. Whether the threshold was crossed is a question for the full-year statistics; what the 2024 trajectory already establishes is that export volumes kept expanding while equity valuations corrected — a divergence between the real sector and the market narrative that investors misread at their peril.
Approved investments: RM47 billion and 53% of manufacturing approvals
The investment pipeline reinforced the export picture. From January to September 2024, approved investments for the E&E sector totalled RM47 billion, accounting for 53% of all approved investments in manufacturing — a majority share that singles the sector out as the dominant destination for new industrial capital in the economy. Since January 2021, the E&E sector has attracted an impressive RM309.7 billion in approved investments. Wong observes that these flows reflect strong confidence in Malaysia's position as a global E&E hub and will drive further growth in exports and employment over the next few years.
Two analytical points follow. First, approvals are a leading indicator with a lag: the RM309.7 billion accumulated since 2021 converts into factories, capacity and exports over a multi-year horizon, which is precisely why the 2024 commitment wave — Intel's packaging project and Infineon's fab expansion at its core — should show up in trade statistics well into the decade's second half. Second, the 53% share means the health of the entire manufacturing investment cycle is now tied to semiconductor demand conditions; concentration is both the sector's strength and a structural exposure if the global chip cycle turns.
Outlook: 11.41% annual growth to a US$27.48 billion market by 2029
Backed by government initiatives such as the NSS and sustained foreign investment, Malaysia's semiconductor sector is projected to grow at an annual rate of 11.41% from 2024 to 2029, reaching an estimated market size of US$27.48 billion by 2029. The projection embeds the assumptions the year's events support: anchor investments converting into capacity, packaging demand staying central to the AI hardware cycle, and the incentive framework under the NSS operating roughly as announced. Each assumption carries its own risk — the Budget 2025 dispute over the RM25 billion mechanics is one, the global subsidy race another — but the compound figure gives a concrete benchmark against which the strategy's three-phase decade can be judged.
Risks: talent, R&D and the competitive squeeze
The industry's own diagnosis of what could slow that trajectory converges on three structural constraints. The first is talent. The NSS goal of training 60,000 engineers underscores the shortage of professionals in advanced roles such as IC design and high-end manufacturing. Progress is measurable: in 2024, 50.83% of upper secondary students enrolled in science, technology, engineering and mathematics (STEM) streams, an increase from 40.95% in 2021. Lai considers the strides commendable but insufficient on their own — education reform, industry collaboration and infrastructure investment must be prioritised together to build a robust talent pipeline. The second constraint is research and development: Koh Dim Kuan, executive director and CEO of 3REN Bhd, notes that R&D investment remains relatively low compared with leading semiconductor hubs and existing manufacturing infrastructure. The third is competition — from subsidised leading nations and from fast-entering developing economies at once, as Cheah describes, with academic infrastructure that cannot be improved overnight and local universities that will need sustained industry support.
Koh, who sums up 2024 as a year to be remembered for the sector — and for his own company a good one, capped by its November listing on the ACE Market of Bursa Malaysia — recommends that immediate action focus on three areas:
- greater emphasis on education and vocational training to develop a steady pipeline of semiconductor-ready talent;
- stronger industry–academia collaboration to align skill development with real-world requirements;
- enhanced government incentives for R&D to encourage innovation in high-value semiconductor applications.
He also highlights the demand-side transformation: global adoption of artificial intelligence is driving demand for chips optimised for machine learning, deep learning and edge computing, and while Malaysia is well positioned in the global supply chain, it has yet to fully capitalise on AI-driven innovation. The NSS can bridge that gap, in his view, by promoting AI-specific research initiatives, incentivising start-ups in the AI-semiconductor space and fostering collaboration with global leaders in AI technologies. Addressing talent shortages and building advanced manufacturing capabilities — including wafer foundry and advanced packaging — will be, he argues, the most crucial parts of the strategy's execution.
Bottom line: a year to remember, a decade to prove it
While 2024 presented a volatile landscape for Malaysian semiconductor equities, the sector's strong underlying performance and strategic direction suggest a positive outlook for the coming years, Lai concludes. Chu, noting that ViTrox showed quarterly revenue improvement from the beginning of the year, believes the worst is over and is cautiously optimistic about the next three to six months; he reads the year as challenging and full of uncertainty, but one in which resilience and adaptability were demonstrated. Koh frames the NSS as an ambitious yet achievable framework that builds on the country's strengths as a global semiconductor hub, with success dependent on effective implementation, sustained investment in talent and R&D, and partnerships with key global players. The full year-end review was published by The Edge Malaysia at https://theedgemalaysia.com/node/739328.
The balance sheet of 2024, then, reads as follows. Assets: two anchor commitments worth a combined RM56 billion-plus, a decade-long strategy with RM25 billion of incentives behind it, quarterly export growth that never broke stride, an investment pipeline supplying more than half of all manufacturing approvals, and a projected 11.41% annual expansion to 2029. Liabilities: an unresolved argument over how the incentives will actually be allocated, a talent gap that STEM enrolment gains have only begun to close, low R&D intensity, and a subsidy race in which richer competitors move on the same technology wave. Whether the assets outrun the liabilities is the question the NSS's first full implementation years will answer — and 2024 was the year the question was finally posed with a price tag attached.
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