CIMB: Malaysia Expanding Role in AI Semiconductor Value Chain

Malaysia's semiconductor sector is broadening its participation in the global artificial intelligence supply chain, moving into higher-value activities beyond its traditional assembly and testing base, according to a new analysis by CIMB Securities. The brokerage's findings follow a late-July technology tour in Penang with 13 institutional investors from Malaysia and Singapore.

Broadening AI Infrastructure Role

CIMB noted that after meeting with 12 companies, it's clear that local firms are participating across different layers of the AI infrastructure. The tour covered companies involved in IC design, advanced packaging, automated test equipment, and electronics manufacturing services.

For example, the report highlights that ViTrox is benefiting from stricter inspection requirements for complex AI chip designs, while Mi Technovation supplies specialty materials for advanced packaging. Meanwhile, SkyeChip provides high-speed memory and connectivity technologies essential for AI processors.

Silicon Photonics Emerges as Key Theme

A recurring theme from the meetings was the growing importance of silicon photonics, CIMB said. As AI data center clusters scale, traditional copper interconnects are reaching their performance limits, making faster optical data transmission a critical next step.

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Several Malaysian companies are positioning themselves to capitalize on this shift:

• Inari Amertron is involved in silicon photonics for AI data center interconnects.
• Dagang NeXchange is engaged in silicon photonics wafer fabrication.
• NationGate contributes to optical transceivers and AI servers.
• EG Industries is advancing into higher-speed optical modules, progressing from 800G towards 1.6T.

Advancing Local Design and Packaging

The report also pointed to a concerted effort to boost domestic capabilities in advanced packaging and chip design. The Malaysian Advanced Packaging Consortium is fostering collaboration between players in chip design, equipment, materials, and outsourced assembly and test (OSAT) services.

Firms such as SkyeChip, GreatAsic, and FusionAP are actively expanding Malaysia’s footprint in silicon IP, custom ASIC design, and advanced packaging integration. Based on these developments, CIMB Securities maintains an Overweight stance on the Malaysian technology sector, stating a preference for companies where AI-driven demand is visible in orders, shipments, or recurring revenue.