Malaysia’s E&E industry to see slower growth in 2023, says MSIA

Malaysia’s electrical and electronics (E&E) industry is likely to see slower growth in 2023 compared to last year, amid global headwinds, says the Malaysia Semiconductor Industry Association (MSIA). 

MSIA president Datuk Seri Wong Siew Hai said Malaysia’s E&E sector had grown 18% in 2021 and 30% in 2022.

“We continue to grow, but it’s not easy...because of the headwinds, including the pending recession and tensions between US and China. 

“So, we expect to see a slowdown, especially in the correction of consumer products,” he told reporters after the launch of MSIA 2022 E&E Survey by Deputy International Trade and Industry Minister Liew Chin Tong.

In a statement on 21st February , Wong said globally, the semiconductor industry’s revenue is forecast to grow to US$1 trillion in 2023, from more than US$500 million last year and thus, it has to seize the opportunity as Malaysia has been a hub for the electrical and electronics (E&E) industry.

He said the E&E industry is the country’s golden goose and therefore, Malaysia needs to nurture and grow the industry.

“The semiconductor is going to be the foundation for all technology. It is going to propel growth, not only for Malaysia but the world. I would encourage the government and acknowledge the Economic Planning Unit (EPU) because they have recognised the E&E industry as the country’s high-impact and strategic industry.

“And therefore, we need to get a special focus on how we can take and seize the opportunity that we have in front of us,” Wong said.

According to MSIA’s survey, the outlook for 2023 remains soft, with 50% of the surveyed E&E companies expecting a decline in orders, while 25% of them are still expecting an increase in orders, as some product categories would see continued growth, while other categories would see a decline.

Meanwhile, 65% of the surveyed E&E companies are still pushing ahead with planned capital expenditures and investments.

“This is important as Malaysia has already attracted E&E investments of RM186.2 billion since January 2020 (2020: RM15.6 billion, 2021: RM148.0 billion; and from January to September 2022: RM22.6 billion).

“This reflects the long-term prospects of the industry, and businesses’ confidence in Malaysia as a location for semiconductors and electronics,” Wong said.

The MSIA president added that for Malaysia to be globally competitive, Malaysia needs to focus on the war for talent through closer government–industry collaboration and closer industry–academia collaboration.

Meanwhile, in his speech during the MSIA survey’s launch, Liew said Malaysia must look at the semiconductor industry as a strategic industry against the global backdrop of heightened geopolitical tensions and supply chain disruptions.

He said together with a handful of other nations, Malaysia is critical to the global supply chain of semiconductors.

“It is under this context that the government, MSIA and industry players must rethink the strategic role of the Malaysian semiconductor industry. The E&E sector has remained the cornerstone of the manufacturing sector in our country, contributing significantly to exports and approved investments.

“However, the Ministry of International Trade and Industry aspires for the industry to be more broad-based in terms of depth and breadth of coverage of the supply chain by encouraging far higher value-added products and technologically complex manufacturing processes within the industry,” the deputy minister said.

He said the National Investment Aspiration highlights the need for economic complexity, integration of local supply chains with regional and global supply chains, and the creation of new economic clusters.

In line with this, Liew said the E&E sector needs to move up the value chain and produce more innovative and high value products that would enable Malaysia to compete globally by exploring new business models, technologies and production methods that will increase productivity, reduce costs, and improve quality.

He also said the industry needs to pivot towards providing higher-income jobs for locals, and reducing dependency on foreign workers.

“This can be achieved by enhancing the skills and knowledge of the local workforce, creating more high value jobs that utilise advanced technologies, and improving the working conditions and benefits offered to employees,” Liew added.