KUALA LUMPUR: Malaysia is stepping up efforts to move into higher-value segments of the global semiconductor industry, with the government betting on a new incubation programme to build a pipeline of locally anchored chip innovators.
Deputy Minister of Science, Technology and Innovation Datuk Dr Mohammad Yusof Apdal said the pre-launch of SemiconStart Malaysia signals a broader national push to strengthen upstream capabilities, warning that shifting global dynamics are making technological depth and resilience increasingly critical.
“Moving further up the value chain is no longer optional. It is central to Malaysia’s long-term competitiveness, resilience and economic relevance,” he said at the programme’s unveiling yesterday.
He noted that as geopolitical tensions intensify, global semiconductor supply chains are becoming more selective and vulnerable to disruption, raising the stakes for countries reliant on external capabilities.
“Semiconductors are not just an industry concern; they are a strategic national interest,” he said, adding that Malaysia must build stronger domestic capabilities to reduce long-term vulnerabilities.
While Malaysia has long established itself as a key player in semiconductor assembly, testing, and packaging, Yusof said that value in the industry is increasingly concentrated at the front end, particularly in design, intellectual property, and advanced materials.
“Countries that build strength in these areas will not only capture greater value but also shape the future of the industry,” he said.
Against this backdrop, SemiconStart Malaysia is positioned as a structured effort to translate policy ambition into tangible outcomes, focusing on nurturing startups in areas such as integrated circuit design, photonics, Micro-Electro-Mechanical Systems (MEMS) and quantum technologies.
The programme, led by the Malaysian Technology Development Corporation (MTDC) in collaboration with Silicon Catalyst UK, combines early-stage funding of up to RM1 million per company with access to global industry networks, technical validation and design tools.
Yusof stressed that execution will be key, noting that policy frameworks alone are insufficient without the ability to build real companies and technologies.
“What matters is whether we can translate intent into real companies, real technologies and real capabilities,” he said.
MTDC chairman Tan Sri Abd Rahman Mamat echoed this, describing the initiative as a “deliberate shift” in Malaysia’s approach to deep technology development.
“This is not just about supporting startups. It is about building Malaysia’s capability to develop semiconductor technologies at the highest level,” he said.
He added that the programme is designed to address a long-standing gap in Malaysia’s ecosystem by creating a consistent pipeline of semiconductor ventures capable of competing in high-value segments.
“Malaysia has long been recognised as a reliable player in semiconductor manufacturing, but we must go beyond manufacturing alone,” he said.
“Value is increasingly concentrated in areas such as design, advanced materials, photonics, MEMS and emerging domains like quantum technologies.”
Rahman warned that failure to act could leave Malaysia behind as global competition intensifies.
“The cost of inaction is far greater, and delaying action is no longer viable,” he said.
A key differentiator of SemiconStart Malaysia is its partnership with Silicon Catalyst UK, which brings a global ecosystem of industry advisers, investors, and technical partners to accelerate the commercialisation of semiconductor startups.
Through this collaboration, Malaysian and Malaysia-based companies will gain access to international expertise and market pathways that would otherwise take years to develop independently.
However, both Yusof and Rahman stressed that participation in global ecosystems must translate into tangible benefits for Malaysia, particularly in building local talent and retaining intellectual property.
Participating companies will be required to demonstrate a strong local presence, including developing domestic technical capabilities and anchoring intellectual property within Malaysia.
This approach is intended to ensure that innovation contributes to long-term national capacity building rather than merely integrating into global value chains without meaningful local impact.
The programme aligns with Malaysia’s National Semiconductor Strategy and Budget 2026 commitments, which allocated RM7.9 billion to strengthen the country’s electrical and electronics sector and talent pipeline.
Malaysia currently accounts for about 13% of global semiconductor testing and packaging and remains the world’s sixth-largest semiconductor exporter, but the next phase of growth will depend on its ability to move into higher-value activities.
SemiconStart Malaysia is expected to officially launch later this year, with applications opening this month.