Intel to invest US$7b on a new chip packaging factory in Malaysia

  • When Washington is advocating domestic production to fight the global shortage of chips, Intel decided upon a major Asian investment.
  • The new state-of-the-art advanced chip packaging facility will be in the island state of Penang.
  • The tech giant has also begun hunting for technicians and engineers for the new facility.

Almost 50 years ago, in 1972, US-based Intel Corporation expanded with its first ‘offshore’ location in Malaysia. An initial investment of US$378,000 (RM1.6 million) has grown to over US$5.9 billion (RM25 billion) with the memory chip assembly plant growing gradually to be one of Intel’s most complex sites. 

Now, the US chip giant wants to double down on its manufacturing network in Malaysia — a crucial leg of the company’s supply chain. Intel announced that it will be pouring in US$7 billion (RM30 billion) to build a new chip packaging facility in Penang.

Malaysia has been holding a key role in supporting Intel’s customer needs while increasing supply to meet the growing demand. Currently, Penang is home to Intel’s first factory that now delivers multi-functional operations including assembly test manufacturing, design and development competencies, global shared services capabilities, as well as regional sales and marketing.

In a job posting on the company’s website, it is stated that Intel Malaysia has grown from a workforce of just 100 to about 12,000 today, and 2022 will mark 50 years of operation in the country. “As part of Intel’s recently announced IDM 2.0 strategy and building on its strong foundation laid close to five decades ago, Intel is continuing to invest in and expand its existing facilities in Malaysia,” it added.

The substantial role of Malaysia in the semiconductor supply chain was made apparent over the last two years since the global shortage started. In fact, Malaysia has been the hub for semiconductor packaging but having suffered a series of Covid-induced factory shutdowns has impacted the overall supply chain.

Even Taiwan, the world’s major chip producer, has said that it cannot sort out the global shortage alone and needs Malaysia to do its part to help ease the stress on the chip shortage. For context, Malaysia is currently one of the top ten countries in the semiconductor industry, accounting for about seven percent of the global semiconductor trade and about 13% of the global capacity in terms of back-end assembly tests and packaging.

Recent reports indicated that Intel CEO Pat Gelsinger is planning to visit Taiwan and Malaysia in the coming week to meet his company’s arch-rival Taiwan Semiconductor Manufacturing Co, among others. This would be Gelsinger’s first trip to Asia since taking over in February, according to the report by Bloomberg. Just recently, during the Fortune Brainstorm Tech summit in California, Gelsinger reiterated his long-held stance against chipmaking dependency on Asia. 

To be fair, Asia Pacific is the world’s biggest market for semiconductors, accounting for 60% of global semiconductor sales, with China alone accounting for over 30%. Whether Gelsinger likes it or now, within the Asia Pacific region alone, China, Japan, South Korea, and Taiwan together have become the “Big 4” semiconductor players, holding four of the top six spots by overall semiconductor revenue and each has several global semiconductor giants. 

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