The Malaysian state of Penang is attracting billions of dollars of foreign direct investment, including from Taiwan, as it positions itself as an attractive low-end value chain manufacturer and also scales up its facilities.
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00:00Customizing industrial computers for buyers in the ASEAN region.
00:06These engineers at Taiwanese computer maker Advantech are showing off their latest orders,
00:11now produced in the company's newest service center in Penang, Malaysia.
00:17It's followed its customers there, many of whom now prefer to do business in the region
00:21so as not to be overly reliant on China, where the risks of trade barriers or supply chain
00:25disruptions are greater and labor costs are rising.
00:29Among Southeast Asian nations, Malaysia has emerged as an attractive option for Advantech.
00:33It's also considered an advantage in Malaysia, like for example, multiple ratio, like good
00:41education, good talent, good English capability, and so on.
00:46So consider all the factors, so we invest in Penang to become a shared service center
00:54covered in the whole ASEAN region.
00:58And many multinational companies agree.
01:01In 2023, Penang attracted a record US$12.8 billion in foreign direct investment, garnering
01:07more than the combined total of the previous decade.
01:11This is Bayan Lepas Science Park, the first free trade zone in Malaysia.
01:15It opened in the 1970s and has since become home to big names like Intel, AMD, and HP,
01:21companies which have helped Penang become known as the Silicon Valley of the East.
01:26Now some of these long-term investors like Intel, which has been here over 50 years,
01:30are still continuing to develop in this area.
01:33Since then, Penang has become a leader in the lower end of the value chain for tech
01:36like semiconductors, and its established government incentives and infrastructure have made it
01:41a top destination for investors.
01:43The infrastructure in Penang has evolved dramatically.
01:47Even right now, the government has been putting in a lot of effort to improve the infrastructure
01:53including the upcoming rail links to Penang and the investment in electricity infrastructure.
02:00In May, the government launched its National Semiconductor Strategy, aiming to move up
02:04the value chain and strengthen talent retention.
02:07But analysts warn this could take years.
02:09For now, the state's investment agency is diversifying beyond semiconductors to boost
02:14production and balance the economy.
02:16We brought in the mech tech industries, we brought in the food industries, because these
02:20industries are not so cyclical and we hope that while the semiconductor cycles happen
02:28to be low, these other industries will be able to buffer their shocks.
02:33As Penang looks to benefit from shifting trends in chipmaking, it's attracting growing interest
02:37from Taiwanese companies like Advantech.
02:39And with this momentum, Penang hopes to solidify its place as the resilient Silicon Valley
02:44of the East and reshape the global semiconductor supply chain.
02:47Patrick Chen and Tiffany Wong in Penang, Malaysia for Taiwan Plus.