Malaysia is selling more chips, but it isn’t winning more of the market
On paper, Malaysia’s trade figures read like a victory lap. Technology-related exports jumped about 55 per cent year-on-year in September, and the monthly trade surplus hit its second record high of MYR 34 billion (US$8.38 billion). When looking closer, though, the boom appears to be largely borrowed. In a new note, CGS International argued that […] The post Malaysia is selling more chips, but it…
Malaysia's technology exports surged 55% year-over-year in September, but the growth may be more reflection of global demand for memory chips than Malaysia winning a larger slice of the market, according to CGS International. The country's substantial trade surplus with the US is offset by deficits with China and Taiwan. Despite the export boom, Malaysia's revealed comparative advantage (RCA) index for memory exports has not improved, indicating the gains have yet to translate into wage increases, job creation, or new investments for Malaysians.
The surge in memory exports is mainly driven by the AI and data center build-out, but Malaysia's back-end assembly, testing, and packaging have thinner margins compared to the front-end design and wafer fabrication. Malaysia already holds a competitive position in IC parts and solid-state devices, but its RCA score has not seen significant improvement.
The research house suggests Malaysia should focus on moving up the value chain to sustain growth beyond the current demand cycle by developing advanced packaging and semiconductor services.
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