Malaysia inks landmark US$250m deal with Arm Holdings for chip design blueprints
KUALA LUMPUR: Malaysia is heading for a fundamental shift in semiconductors and technology with a move to produce AI chips locally, says the Prime Minister.
Datuk Seri Anwar Ibrahim described the partnership deal inked yesterday with UK-based Arm Limited as the start of a second semiconductor wave.
“Through a comprehensive partnership with Arm, we have conceived one of the most ambitious technological plans Malaysia has ever seen – to pioneer Made by Malaysia AI chips.
“These chips will be designed, manufactured, tested and assembled here, and sold to the rest of the world,” he said in his keynote address at the launching ceremony of strategic collaborations in the semiconductor industry here.
The partnership has three key features, which includes establishing comprehensive training programmes for 10,000 IC design engineers to create a robust talent pipeline for local semiconductor industries.
“All relevant agencies in the public and private sectors, education institutions and universities must focus and start this programme immediately,” Anwar said.
Looking to the future: Anwar posing together with (from left) Chief Secretary to the Government Tan Sri Shamsul Azri Abu Bakar, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz, Rafizi, Arm chief executive officer Rene Haas, Arm executive vice-president and chief commercial officer Will Abbey and Arm North America sales vice-president CK Tseng at the launch of Malaysia’s silicon vision strategic collaboration in semiconductor industry in Kuala Lumpur. — FAIHAN GHANI/The Star
Selected Malaysian companies will also have access to Arm’s technology and intellectual property (IP) portfolio.
“The partnership will also facilitate the development of locally designed semiconductor products, advancing the nation’s goal of producing more advanced chips in Malaysia,” he said.
The Prime Minister said Arm will also set up its first Asean office in Kuala Lumpur, with the aim of expanding outreach to the Asean, Australia and New Zealand markets.
Anwar acknowledged the cross-ministerial efforts by the Investment, Trade and Industry Ministry, Malaysian Investment Development Authority (Mida), and the Finance and Economy ministries for working to make the partnership a reality.
“Together, these ministries have worked diligently to secure Malaysia’s position as a semiconductor leader.
“I am confident that we will create economic multipliers that are not confined by the beautiful shores of Malaysia,” he remarked.
The landmark MOU and contract with Arm seeks to establish an ecosystem-wide partnership on semiconductors.
The projected ecosystem impact of a complete Arm Compute Subsystem lifecycle is approximately RM133bil.
Economic spillovers are expected in innovation, job creation, wage growth, exports and investment.
Earlier, Economy Minister Datuk Seri Rafizi Ramli told Bloomberg Television that the 10-year agreement aimed to push Malaysia beyond its traditional role in chip assembly and testing, enabling local companies to design and develop their own semiconductors to compete in the global market.
Meanwhile, the Prime Minister’s Office (PMO) said Anwar would be chairing special state development meetings with key state government leaders and agencies.
Anwar’s senior press secretary Tunku Nashrul Abaidah said the Prime Minister had made it clear that the agenda to eradicate hardcore poverty remains his top priority.
“Since this agenda was announced in Budget 2023, he has mobilised all political secretaries to the states to ensure that efforts and assistance are systematically delivered to hardcore poor groups.
“These efforts include increasing the income of targeted groups, providing job opportunities, improving access to education, healthcare and housing, as well as enhancing the living standards and well-being of impoverished households.
“As of Dec 31 last year, Putrajaya, Negri Sembilan, Melaka and Perlis have successfully achieved zero hardcore poverty, and this success will be extended to the other states,” Tunku Nashrul said during the daily PMO briefing yesterday.
Anwar: Jobs, innovation and growth expected with latest shift
KUALA LUMPUR: Malaysia’s deal with SoftBank Group Corp-owned British firm Arm Holdings PLC is seen as a strategic move to propel the country up the semiconductor value chain and foster an intellectual property (IP)-based ecosystem, industry experts say.
Rakuten Trade head of equity sales Vincent Lau said the Bursa Technology Index is expected to gain some support from this development with Arm and provide a cushion for the sector amid broader market uncertainties.
The local technology sector has been under pressure, with the technology index down by about 25% year-to-date.
“The collaboration is an ambitious yet positive first step to move up the value chain. It also adds to the ongoing momentum in the technology sector beyond just the data centre theme.
“While market volatility persists, this initiative could provide some stability.
“There are also signs that the technology sector is approaching a bottom, with some stocks having dropped to levels seen during the Covid-19 pandemic period,” he told StarBiz.
Yesterday, Malaysia inked a memorandum of understanding and contract with Arm to establish an ecosystem-wide partnership on semiconductors.
This first-of-its-kind collaboration grants Malaysia access to Arm’s high-performance, power-efficient compute platform, Arm Compute Subsystem (CSS), the flexible licensing programme, Arm Flexible Access, among others.
As part of the deal, Arm will also train 10,000 semiconductor talents.
At the heart of this initiative is the government’s vision to build Malaysia’s first artificial intelligence chips in advanced industries, using a local-first approach at every part of the supply chain.
Further, Arm is also planning to set up an office in Malaysia in support of the government’s mission, which aims to expand outreach to Asean and Australia and New Zealand markets.
Economy Minister Datuk Seri Rafizi Ramli said this collaboration represents a shift from the traditional approach of relying on grants and tax exemptions to attract foreign direct investment into Malaysia’s semiconductor industry.
“For decades, Malaysia has built a robust semiconductor sector by attracting multinational corporations to set up their operations here.
“However, much of this has been focused on back-end processes such as assembly and testing, which account for only 15% to 20% of the total value chain.
“The bulk of the value – around 60% – lies in front-end activities such as chip design,” he said during the panel session, “AI Leadership: The Power of IP Transfer in Malaysia”, at the Strategic Collaboration in Semiconductor Industry yesterday.
Rafizi added that the traditional approach has helped Malaysia become a manufacturing hub.
However, advancing to the next level, one driven by IP and high-value investments, poses significant challenges.
“Relying on local companies to organically develop research and development and IP capabilities would be costly and time-consuming.
“Instead of offering conventional tax breaks and capital subsidies, Malaysia is now using IP as an incentive,” he said.
Malaysia will be spending US$250mil over a decade to acquire Arm’s chip design plans for local manufacturers.
The projected ecosystem impact of one complete Arm CSS lifecycle is about US$30bil.
“I want to see a Malaysian-designed chip enter the global market within the next five to seven years,” Rafizi said.
Malaysia Semiconductor Industry Association President Datuk Seri Wong Siew Hai also applauded the government’s plan, which is in support of the National Semiconductor Strategy launched last year.
Wong said the key challenge moving forward is the plan’s execution and talent. He noted that while the country has talents, there are still gaps in expertise that need to be addressed.
“To bridge this gap, we must bring in foreign expertise, and if Arm can help Malaysia in that aspect, that is good.
“Alongside talent development, market demand is another key factor.
“Do we have customers for locally designed chips?” he asked.
Meanwhile, QES Group Bhd
managing director and president Chew Ne Weng said while the tie-up with Arm will give Malaysia a push towards a higher value chain, the only concern will be regarding the talent pipeline and the stability of energy and water resources if wafer fab foreign direct investment were to come in a big way.
“These are the gaps that the government needs to address quickly. It will not be an easy feat for companies to tape-out (the final design stage before chip manufacturing).
“However, it is achievable by leveraging the expertise of existing integrated circuit design firms and foreign-owned companies.
“A longer runway could be necessary but we need to start somewhere,” he said.
Arm partnership set to reshape technology sector
Wong (left) presenting a token of appreciation to Chow (right) as Ahmad Fuzi looks on. — LIM BENG TATT/ The Star
