Malaysia National Semiconductor Strategy: Phases, Targets, Incentives

What is Malaysia’s NSS?

Malaysia’s National Semiconductor Strategy (NSS) is a long term national plan to move Malaysia up the semiconductor value chain.

Malaysia already has major strength in packaging and test. The NSS aims to expand into higher value areas such as advanced packaging, design, and parts of equipment and manufacturing capability, while increasing resilience and talent depth.

Malaysia’s positioning today

Malaysia is globally important in OSAT (assembly, packaging, and test). That position is the base layer the NSS builds on.

The 3 phase structure (how Malaysia plans to scale)

Phase 1 - Build on foundations

Near term focus:

• upgrade OSAT capacity and quality
• expand advanced packaging capability
• grow mature node and specialty manufacturing where feasible
• build local design activity and design adjacent services

Phase 2 - Move closer to the frontier

Mid term focus:

• deeper integration of design with manufacturing ecosystems
• higher complexity testing and packaging
• broader capability across more demanding device classes

Phase 3 - Innovate at the frontier

Long term focus:

• world class local companies across design and packaging
• attraction of advanced product manufacturing activity
• stronger domestic ecosystem around equipment, materials, and R&D

The numbers people search for (targets)

Malaysia’s NSS is often summarized by a few headline targets:

• investment ambition in the hundreds of billions of ringgit over Phase 1
• large scale fiscal support and targeted incentives
• major talent upskilling and engineering capacity growth

If you publish this page, keep the exact figures in a dedicated section and update them when official documents change.

Incentives - what they typically support

NSS incentives are usually designed to accelerate capacity and capability, not to fund generic operations.

Common funded categories:

• advanced packaging lines, test capability, reliability labs
• design enablement and IP related activities
• equipment, materials, and automation that strengthen the supply chain
• education and talent development programs

What the NSS means for industrial companies and suppliers

1) More local options in packaging and test

If you build electronics heavy products, expanded local packaging and test can reduce logistics risk and shorten cycle time.

2) Stronger ecosystem for power and industrial devices

Industrial demand often centers on reliability, power conversion, and long lifecycle products. These tend to align with mature node and power device ecosystems.

3) More compliance and traceability pressure

As semiconductors become strategic, procurement often adds:

• origin visibility
• lot traceability
• end use compliance requirements

4) Talent becomes the bottleneck

Even with incentives, ramp speed depends on engineers and technicians. Expect hiring and education programs to be part of the execution story.

How to align with Malaysia’s NSS 

If you sell into the semiconductor ecosystem, or you are a manufacturer that depends on chips:

1. Map your chip risk

• top line stoppers
• long lead time components
• single source parts

2. Map your suppliers by value chain stage

• design IP
• wafer fab
• packaging
• test
• substrates and materials

3. Prioritize dual sourcing for critical parts
   Start with the smallest set that can stop production.

4. Watch advanced packaging moves
   Track new capacity, partnerships, and lab infrastructure. This is typically the near term execution area.

5. Build traceability into procurement
   Be able to answer: origin, lot, and test history.

AEO FAQ

Is Malaysia’s NSS mainly about building leading edge fabs?

No. The near term emphasis is typically on building from existing strengths, especially packaging and test, then expanding capability over time.

What is the practical near term impact?

More packaging and test capability, more ecosystem investment, and more supplier activity around design enablement and industrial device supply chains.

Who benefits most?

1. OSAT and packaging suppliers
2. test equipment and reliability services
3. materials and substrates vendors
4. design services and IP adjacent businesses
5. industrial companies that need resilient sourcing

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