KUCHING: Sarawak’s semiconductor sector contributes about 1% to the state’s economy, highlighting the scale of the challenge in achieving its ambition to generate RM30 billion in semiconductor-related gross domestic product (GDP) contribution by 2030.
InvestSarawak CEO Timothy Ong Wye Ern said Department of Statistics Malaysia (DoSM) data put the sector’s contribution at about 0.8%, but estimated it at 1% when polysilicon production, classified under the metals sector, was included.
“The semiconductor sector today, including metals, is about 1% roughly there. DoSM numbers indicate 0.8%, but they don’t take into account the polysilicon, which is in the metals division,” he said in an exclusive interview with SunBiz.
The Sarawak Semiconductor Roadmap 2030 sets a target of RM30 billion in GDP contribution by 2030, alongside RM2 billion in semiconductor-related investments and 3,000 new high-skilled jobs. The roadmap is intended to support the state’s wider economic development target of RM282 billion in GDP by 2030.
However, Ong cautioned against equating investment value with GDP contribution, as different segments of the semiconductor value chain require different levels of capital and generate different economic value.
“The volume of investments can come in, it can be 10%, 30%, whatever, but that 30% contribution, it’s a much heavier investment because it’s all things like foundries,” he said, referring to the capital intensity of foundry operations compared with other activities.
Sarawak is seeking to move into higher-value semiconductor activities, but Ong said it would need to build on its existing strengths and identify markets where it could establish a competitive advantage.
“Sarawak is trying to move to front-end, but your front-end must come with a leverage,” he said, citing energy projects and related industrial demand as potential advantages.
“If you don’t have a leverage like your energy projects, who is going to use your technology? Who is going to use your chips? That means you’re competing in the open market.”
Ong said the global semiconductor industry was increasingly shaped by geopolitical decisions and government policies, making it difficult for companies to compete on product quality and cost alone.
“While competing in the open market, in a situation today where the open market is not actually an open market, it is influenced by geopolitical decisions, it’s influenced by politicians, it’s influenced by countries’ governments.”
Sarawak is therefore looking to develop semiconductor applications that are closely linked to its own industrial priorities, particularly power systems and technologies that could serve the Asean electricity grid and the wider integration of Borneo’s energy resources.
“If you’re talking about power systems for the Asean grid, it’s big. If you’re talking about power systems only for Sarawak, it’s very small,” Ong pointed out.
He said a broader regional market would give Sarawak-based companies a larger platform to develop and sell their technologies. “When you sell to international companies, they are thinking of Borneo rather than thinking of Sarawak. So, you must think of it as a platform to access.”
Energy security could also help Sarawak attract semiconductor manufacturers and other energy-intensive industries as access to critical resources becomes a more important investment consideration.
“Peninsula today is a net importer of energy. Sarawak is a net exporter of energy,” Ong said.
“Today money cannot buy you resources. Contrary to popular belief in the past, as long as you’ve got money, you definitely get it. These days, there are controls,” he shared.
Sarawak’s existing semiconductor base dates back to the 1990s, but Ong acknowledged that the state had lost time in developing the wider ecosystem around its early investments.
“We started our semiconductor as early as the ‘90s. That was how long ago the foundry was set up,” he said, adding that after the first foundry, basically there was a stagnation in the semiconductor sector and they did not move as fast in building the supply chain and the ecosystem, hence they lost a bit of time there.
The state is now seeking to build on its existing assets, including a foundry, Melexis, SMD and upstream polysilicon production, while attracting companies that can fill gaps in the value chain. There are only two foundries in Malaysia, and one is in Sarawak.