00:00So the PM is in Japan. What can we expect? What are you hoping to see? I mean, can we
00:05see Japanese investments in tech in Malaysia?
00:10You know, Japan is not so much talked about in the semiconductor industry, because we tend to talk about the
00:16U.S., Taiwan, and China, and so on.
00:19But Japan actually, in my opinion, is an indispensable semiconductor hub. And they are producing many semiconductor equipment like dicing,
00:31bonders, and so on.
00:32Not only that, they have a capture of materials like a photoresist of 70%, 75%, ABF film of about 95%,
00:43and mask of 100%. So they are in control of the market.
00:49So I see that there is a real opportunity to bring technology companies from Japan to Malaysia.
00:56But what exactly, what technology would benefit Malaysia in a big way?
01:02For example, the equipment I mentioned just now of dicing, bonding, and so on, they can bring some of this
01:07technology to Malaysia and set up investment here and collaborate with some of our supply chain here to support them.
01:14And also some of the materials that they have that is of high value.
01:18You know, they have high market share, global market share, that they can also do some of the work here.
01:23I think there's a good chance that our ecosystem can support the Japanese companies.
01:28I hope the Prime Minister can bring some of this high technology investment to the country.
01:34Is there a sense of how big these investments might be?
01:37I mean, you've had conversations, I'm sure, with the Prime Minister prior to this.
01:40It would be substantial, I think.
01:43Because these are high technology companies, so their investment would be substantial.
01:48Would it be a game changer for Malaysia's own tech ambitions?
01:54To say it's a game changer, but it will definitely strengthen our semiconductor ecosystem.
01:59How so?
01:59Because there are certain areas, like materials, we don't have equipment, we don't have gaps in between our supply chain.
02:07This can be filled.
02:08And our SMEs, they support all these companies if they invest here.
02:13You're talking about high tech.
02:15That requires a lot of trained talent.
02:18Talk to us about the need for that kind of talent in Malaysia.
02:22Okay, in terms of equipment, we have a lot of talent in equipment because we have years of experience.
02:27When semiconductors keep upgrading their technology, our simulation companies kept up with the technology.
02:35So, equipment-wise, they have.
02:37But materials, we don't really have.
02:39So, if we can attract them, then we can build another talent, another group of talents that can support materials
02:48development.
02:49There's been a lot of focus on the supply chain disruptions as a result of the Iran war, which is
02:54now into the fourth month.
02:56How is it impacting the chip supply chain and Malaysia?
03:01During the Iran conflict, there is impact.
03:05There were impact, okay?
03:07First of all, the highly talked about was helium.
03:10Because helium, about 20% of it passed through the Hamas Strait.
03:14And when I checked the companies in Malaysia, there were five fabs that use helium.
03:21The rest of the semiconductor, they don't actually use the helium.
03:24So, they are not really affected.
03:26However, they have inventory.
03:27You know, during the geopolitical conflict, the just-in-time way of doing supply chain management is now become just
03:36-in-case.
03:37So, they have supply chain inventory to support that helium for a few months.
03:43So, it's not that they don't have supply, but there's a delay.
03:47There's extended lead time.
03:49However, they have to look for different suppliers.
03:53And they have it from the US, from Canada, and so on.
03:56The only issue is price of helium has gone up.
04:00So, the same thing with all the other industrial chemicals and the other materials that are needed.
04:06Basically, cost has gone up and lead time has gone up.
04:10But it didn't stop production.
04:12You know, everything kept going.
04:14So, is this a new normal where you can expect prices to remain elevated?
04:19As you can see, first of all, I think the price of semiconductor has gone up because it's all driven
04:27by AI.
04:28And the capacity to support what is the demand of AI and its related products has gone up significantly.
04:36That's why you see the semiconductor prices has gone up and capacity has been totally filled, even all the way
04:42to 2027.
04:43And then it's all spilled over to 2028.
04:46So, the issue here now is the cost of manufacturing has gone up.
04:49Our suppliers of companies in Malaysia have to deal with a few challenges.
04:54One is the Iran conflict.
04:56It rises, make the oil price goes up, make the energy price goes up.
05:02Then we have geopolitical tension.
05:03We have tariffs.
05:04And on top of that, we have appreciation of ringgit that makes the cost of manufacturing goes up by at
05:09least 10% or more.
05:10So, our companies here have to navigate this through and have to figure out how to get themselves productive and
05:18still be globally competitive.
05:19So far, they are doing well.
05:22How much clarity is there in terms of the sustainability of the growth within the industry?
05:27We're seeing capex rising in a huge way.
05:31Will that still continue to trickle down to the chip players in Malaysia?
05:36I think all the prices everywhere has gone up.
05:40Lead time has gone up.
05:41So, those who have planned earlier with the factory space and with ordering of equipment and all that will benefit
05:49a lot more because they will capture more of the market share.
05:52But those who did not, they still need them.
05:54They will still find a way to fill up the factory with equipment and so on.
05:59So, I expect that to continue and it's going to be normal.
06:04They just have to figure out how to support the volume versus trying to figure out how to support your
06:10manufacturing costs.
06:12So, both are moving together.
06:15So, that's good news in a way.
06:18There is great power competition in the AI and tech space between the US as well as China.
06:24Is Malaysia benefiting from that?
06:26Yes, you know, Malaysia, okay, as a result of geopolitical tension, Malaysia being neutral and non-aligned has a benefit
06:35of serving both economic powers and the rest of the world.
06:40So, we are being looked at as one of the good locations to do manufacturing with and to support these
06:49two markets.
06:49So, Malaysia, as I say, we all say they have the once-in-a-generation opportunity to fulfill this demand.
07:01So, the opportunity actually is now.
07:04We've got to seize it and supply it and get ourselves improved and able to support new technology.
07:11So, put a number to it.
07:13I mean, what kind of growth?
07:14Put a number to it.
07:15What kind of growth are you anticipating?
07:17What kind of growth are you seeing now and what are you anticipating next few years?
07:20You see, we grew in 2024.
07:24Our E&E export was RM601 billion.
07:282025 was RM711 billion.
07:32And 2026, I would say we're going to exceed RM800 billion export.
07:37So, I don't see that slowing down.
07:39I see that continuing.
07:41In fact, the number could be higher.
07:43Let's talk about tariffs because it's been, I think, a bit more than a year since the liberation tariffs were
07:49announced.
07:50How is that playing out?
07:52Okay.
07:52As you know, for tariffs, the semiconductor is exempted.
07:56So, we don't really have an issue there.
07:58For now, though?
07:58For now.
07:59For now.
07:59Because there are many other sections that he's applying.
08:01But, however, the non-semi-productor, it is impacted.
08:07So, however, but the tariff percentage of 10% is applied to many countries.
08:14So, basically, we are on level playing ground.
08:17So, from that perspective, then, Malaysia just needs to be globally competitive.
08:22That's one.
08:23And two, have an environment that can grow and support new technology.
08:27And for the last 50 years, the North Malaysia has shown performance after performance.
08:32When technology keeps changing, we have delivered to get the products out to the customers in time and on high
08:38quality.
08:39How do you remain competitive in a sector that is so competitive right now?
08:44Okay.
08:44To remain competitive needs a few things.
08:47One, you need leadership.
08:48And the leaders that we have in the country that are managing since 1972 have developed themselves to know how
08:56to manage operations regionally and globally and drive for global competitiveness.
09:05To drive for global competitiveness requires a few things, okay?
09:08Number one, your talent.
09:09The talent has to be developed.
09:10And they have to be creative in terms of problem solving and understanding the needs of the customers.
09:16The key is the customers.
09:17How do we deliver?
09:19And after that, we already learned much about COVID and just in case supply chain management and they have to
09:28maneuver to find more suppliers because the supply chain disrupted.
09:34They need to find more suppliers.
09:36They are learning through all of that.
09:38And that helps the company to be more resilient and be able to deliver.
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