Malaysia is unfazed by China, U.S. chip competition, minister says

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Malaysia is unfazed by China, U.S. chip competition, minister says

KUALA LUMPUR, MALAYSIA – 2018/01/24: A foreigner is seen with a Malaysia flag as a background. Kuala Lumpur or commonly known as KL is the national capital for Malaysia and is the fastest growing metropolitan regions in South-East Asia. The urban city is also well known to the world for tourism and shopping. Kuala Lumpur has a great public transportation for people travel around the city. (Photo by Faris Hadziq/SOPA Images/LightRocket via Getty Images)

Faris Hadziq | Sopa Images | Lightrocket | Getty Images

Malaysia isn’t fazed about competition from China or the U.S. as it pushes into higher-end semiconductor manufacturing, according to the country’s second finance minister.

“The semiconductor space is now in the upcycle — and Malaysia will be a beneficiary of that,” Amir Hamzah Azizan told CNBC’s Karen Tso at the IMF spring meetings in Washington on Wednesday.

He also noted the country doesn’t see China — which is Malaysia’s largest trading partner today — as a rival in the sector.

“I think the reality of it all is, there is enough growth that will go around. So, everybody will get some pickups on that one,” he said.

If anything, Amir Hamzah explained, the recent geopolitical tensions have shown it is critical for supply chains to remain robust.

“We’re seeing a lot of end users now diversifying their supply chain. Our focus, actually, is to provide a very vibrant, strong supply chain connectivity, and make sure that we ride on that.”

Competing with U.S.

Malaysia appears to be benefitting from U.S.-China trade tensions, which has prompted companies to diversify their semiconductor operations. The country is now focused on shifting away from the back end of the chip supply chain production and moving up the value chain.

The country holds 13% of the global market for chip packaging, assembly and testing services, the Malaysian Investment Development Authority said in a 

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. The government is also boosting efforts to grow its

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and attract investments.

While the U.S. is ramping up investments in chips, Amir Hamzah highlighted Malaysia offers a different value proposition.

“I think where Malaysia competes in, we’re not going to go head on to the tail end of the high-end competition, where maybe the U.S. is bringing all the parts,” he said, adding “therefore, I don’t think it’s a big challenge for us.”

The country is focusing on “extending their value chain” to attract new businesses and strengthen its position in the space, he said.

“At the end of the day,” the minister added, its “about economies of scale.”  

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