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IN a major move to bolster its technology sector, the Government has announced plans to invest US$250 million (approximately RM 1.11 billion) over the next decade in collaboration with Arm Holdings Plc, a leading UK-based semiconductor and software design company.
The investment aims to establish a new ecosystem within Malaysia's artificial intelligence (AI) and semiconductor industries.
This partnership will be pivotal in the creation of Malaysia's first domestically designed semiconductor chips, setting the stage for local players to access Arm Holdings’ vast intellectual property (IP) network, as well as technology transfer and expertise.
Malaysia’s goal is to foster the development of up to 10 semiconductor companies, collectively generating annual revenues of US$20 billion.
A recent Bloomberg report cited that while Malaysia has already established itself as a hub for chip testing and packaging, it has yet to make significant strides in chip design. This collaboration with Arm Holdings marks a decisive step in changing that dynamic, Bernama cited.
Arm Holdings has been at the forefront of the global semiconductor industry, having issued over 6,800 patents and with an additional 2,700 patent applications currently pending. More than 300 billion Arm-based chips have already been sold worldwide, highlighting the company’s pivotal role in shaping the semiconductor industry.
This collaboration is part of the MADANI Government’s broader vision to enhance Malaysia's technological capabilities. It will involve key ministries, including the Ministry of Investment, Trade and Industry, the Ministry of Finance, and the Ministry of Economy, all working together to ensure the success of this strategic initiative.
This collaboration with Arm Holdings underscores Malaysia's determination to strengthen its technology sector, making it more competitive on the world stage. By leveraging Arm’s expertise, Malaysia intends to build a sustainable, high-tech ecosystem that can drive long-term growth in AI and semiconductor manufacturing.
At the launch of the Silicon Vision 2025 with Arm Limited event today, Economy Minister Dato’ Seri Rafizi Ramli outlined Malaysia’s broader strategic objectives for the tech sector, emphasising the country’s need to shift its focus within the semiconductor industry.
“At a macro level, we know a few things to be true,” he said. “First, our semiconductor industry must evolve from OSAT (Outsourced Semiconductor Assembly and Test), which currently captures only 5-10% of the value, to integrated circuit (IC) design, which can command over 60% of the value within the supply chain.”
He said, the economic strategy need for Malaysia to focus on developing local, indigenous technology that could generate higher-margin exports and improve supply chain resilience.
Additionally, Rafizi highlighted the importance of venturing into emerging technology sectors such as artificial intelligence (AI), robotics, autonomous vehicles, and the Internet of Things (IoT).
He then posed question: “What should we do to achieve all three of these strategic goals?””
“The answer came through extensive negotiations between the Malaysian government and Arm Limited to establish a collaboration model that would be far-reaching, impactful, and aligned with the country’s technology aspirations.
“We needed a partnership that would take an ecosystem perspective,” Rafizi explained.
“Not something one-off or dependent on low-cost labor, but an ambitious and farsighted approach. We weren’t looking for just technology catch-up or incremental upgrades, but for a technological leapfrog.”
The result of these discussions is a comprehensive ecosystem partnership with Arm, aimed at developing complex design companies based on Arm’s intellectual property (IP) expertise.
The initiative also seeks to cultivate a talent pipeline of 10,000 skilled workers to support the growth of this technology sector.
Rafizi added, the cornerstone of the partnership is the development of the Arm Compute Subsystem (CSS), a critical component of Arm’s technology offering.
“For each of the CSS, we are aiming to build a complete supply chain in advanced industries such as AI data servers, autonomous vehicles, IoT, robotics, and other sectors,” Rafizi said.
An essential aspect of this ecosystem is prioritising local players for every part of the supply chain.
This approach ensures that Malaysia’s technology ecosystem will be self-sustaining and grounded in local innovation.
Rafizi also emphasised the strategic structure for the collaboration, which includes partnerships with advanced foreign firms and a set of proposed technology transfer and localization requirements.
“This structure is designed to uplift local players in a realistic and holistic manner, positioning Malaysia as a long-term player in the global tech arena.”
Looking ahead, Rafizi said: “In the coming months, we will demonstrate our progress on this collaboration with Arm. We will be launching the 10-year vision blueprint, announcing the recipients of the CSS tokens, and showcasing these technology prototypes at the next KL20 conference.”
These milestones will serve as proof of the country’s advancing capabilities in the high-tech and semiconductor sectors, reinforcing Malaysia’s commitment to technological excellence.
Rafizi addressed a key question; in that, “Why would the world’s largest chip architecture designer choose Malaysia?” Rafizi shared that each time, the answer became clearer.
“Time and again, we were convinced that this is indeed the right time, right place, and the right people coming together,” he affirmed.
Rafizi added: “A collaboration with Arm is a show of confidence in what we can achieve. Malaysians owe it to ourselves to believe in our potential and our aspirations. We are ready, and we will be ready, to follow the path of history. This is the beginning of something new, something transformative.” – March 5, 2025