Chip ambitions hinge on talent development

 

M’sia must overcome shortage of engineers, Ic designers

”There are an estimated 10,000 to 15,000 IC designers in the country, but the bulk of them work in multinational companies like Intel and Infineon. It is a challenge to coax these experienced personnel out of their comfort zones and venture into a startup. Hence, talent is concentrated in multinational corporations.”

PETALING JAYA: The country’s potential to be a key hub for advanced semiconductor manufacturing, packaging and fabrication hinges on talent.

Kenanga Research said in a report that talent remained an important concern, after taking into account the country’s strengths, including a well-developed infrastructure, pro-business policies and neutral stance in geopolitics.

The research house said during a meeting with the Malaysia Semiconductor Industry Association (MSIA), the question of how players can move up the value chain and how the government can pivot away from the typical tax incentive mindset to one of attracting and retaining talent was raised.

“Among the environmental, social and governance or ESG components, talent development is a constant concern for the semiconductor industry.

“Key findings from the Semiconductor Quarterly Pulse Survey (fourth quarter of 2024 or 4Q24) showed that talent – specifically a shortage of engineers and integrated circuit (IC) designers, and market competition remained the top challenges for the industry,” it said.

Additionally, data showed that 72% of companies were hiring engineers and technicians in 1Q25, a trend that has continued from previous quarters, indicating a continuous need for talent.

Data also showed that in 2022, the average monthly salary for employees within the electrical and electronics (E&E) industry was RM6,450.

However, only 0.3% of the E&E workforce held an advanced degree, indicating potential for further growth.

According to the research house, there are an estimated 10,000 to 15,000 IC designers in the country, but the bulk of them work in multinational companies like Intel and Infineon.

“It is a challenge to coax these experienced personnel out of their comfort zones and venture into a startup. Hence, talent is mostly concentrated in the already well-established multinational corporations,” Kenanga Research noted.

MSIA then said some steps must be taken to mitigate this.

These include setting up a university focused on Science, Technology, Engineering and Mathematics (STEM), facilitating the hiring of foreign STEM students studying in Malaysia, providing the right incentives to attract foreign talent and encouraging semiconductor players to intensify training.

“The government has earmarked about 10% of the RM25bil allocation to train and upskill 60,000 engineers by 2030 to support advanced manufacturing, research and development, and technological advancements in the semiconductor industry,” it noted.

Meanwhile, Kenanga Research said there were potential opportunities that could emerge in the industry for Malaysia.

There has been growing interest in expanding to Malaysia, especially from Chinese semiconductor firms which are looking to leverage on local infrastructure to facilitate global exports.

“Malaysia remains focused on driving economic growth by fostering a pro-business environment that attracts foreign investments.

“Moreover, Malaysia is actively pursuing high-value foreign direct investment while encouraging collaboration between the local private sector and the government to strengthen and develop a robust semiconductor ecosystem, particularly in advanced packaging,” it added.

To successfully do this, the country will focus on several key factors, including strengthening government incentives for IC design, improving supply chain resilience to support high-end semiconductor manufacturing, and attracting semiconductor fabrication investments.

To add to this, the country had committed US$250mil over 10 years in a strategic partnership with Arm Holdings plc recently to access chip design blueprints and training, aiming to transition from chip assembly and testing (back-end) to high-value semiconductor design and production.

With that, Kenanga Research reiterated the need for greater investments into the semiconductor supply chain to strengthen resilience and attract suppliers from key markets.

“While Malaysia has a strong semiconductor foundation, it must accelerate technological adoption, talent development and infrastructure investments to maintain its competitive edge in the rapidly evolving global market,” the research house said.

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Business group proposes tax breaks and work visas to retain talent

PETALING JAYA: Immediate action should be taken to stem the growing trend of skilled Malaysians seeking employment overseas, says the Chinese Chamber of Commerce and Industry of Kuala Lumpur and Selangor (KLSCCCI).

Its president Datuk Ng Yih Pyng said the brain drain is a critical issue, particularly as Malaysia continues to attract substantial foreign investments but struggles with a shortage of local talent.

Ng emphasised the need for comprehensive measures in Budget 2025 to retain skilled professionals in the country.

“Last year, Bank Negara said nearly 500,000 Malaysians, mostly skilled professionals, were working overseas.

“To become a global leader in high-tech industries, addressing this brain drain is crucial,” he said at the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) 78th annual general meeting here yesterday, which was attended by Prime Minister Datuk Seri Anwar Ibrahim.

Ng proposed introducing tax breaks and work visas as incentives to attract and retain talent within the country.

He suggested the government explore policies to encourage foreign graduates from Malaysian institutions to begin their careers here.

“By granting work visas to foreign graduates in specialised areas, we can enhance our workforce and stimulate economic growth.

“This initiative should focus on roles that are challenging to fill, ensuring our local talent are not sidelined,” he added.

Ng spoke of the potential benefits of such policies for the education sector, saying that offering career opportunities to foreign students post-graduation would make Malaysia a more attractive destination for international education.

“This strategy not only tackles the brain drain but also solidifies Malaysia’s role as a hub for skilled professionals, promoting regional cooperation and advancement during our Asean leadership,” he said.

Beyond addressing the talent shortage, he called for additional funding in Budget 2025 to support the growth of small and medium enterprises (SMEs), which are pivotal to Malaysia’s economy.

He proposed increasing grant support and creating more flexible financing options for businesses in key sectors such as manufacturing and services.

“We recommend additional funding in Budget 2025 to further drive digital integration and boost efficiency.

“Establishing clear guidelines and a proper follow-through process will ensure these grants are accessible and utilised effectively,” he added.

Ng expressed gratitude for the government’s ongoing support for SMEs, particularly through initiatives like the SME Digitalisation Grant, but stressed that more needs to be done to bolster their resilience in the face of rising costs.

“Providing tax cuts and grants to SMEs can help ease financial pressures and promote job creation.

“This will enable SMEs to invest in new technologies, expand operations, and remain competitive locally and globally,” he said.

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China SMEs look to invest in Penang - The Star

GEORGE TOWN: Some 50 small and medium enterprises (SMEs) from China are seeking opportunities to expand their businesses in Penang following the influx of over RM400mil into the state.

Malaysia Extra Low Voltage Association (Melvian) assistant secretary Cheah Chaw Son said that the Chinese companies want to explore opportunities in home furnishings, bio pharmaceuticals, technologies, advertising services, and eCommerces with local partners.

Melvian is an industry body that comprises companies providing ICT, audio and visual, security, and data network infrastructure solutions.

The SMEs from China are set to take part in a business matching session on Oct 22 at G Hotel to find suitable local business partners, that is being organised by Melvian

“In the first half of 2024, Penang attracted RM411.8mil in investment from China. For the past decade, Penang roped in RM13.2bil investments from China that formed 6.8% of Penang’s total foreign investments, with a 50.5% compounded annual growth rate.

“The influx of these funds into Penang attracted the companies’ attention. The Silicon Island development and the upcoming light rail transit project connecting Komtar and Bayan Lepas on the island also enhanced the state’s competitive edge as a pivotal investment hub,” he added.

Cheah is confident that Malaysia’s projected gross domestic product (GDP) growth for 2024 and 2025 will continue spur investors’ interest in the state due to the country’s robust economic health.

“The Socio-Economic Research Centre has projected that Malaysia would close the year with 5.4% GDP growth, sustaining at healthy clip of 5% in 2025,” Cheah said.

The companies would take part in a business matching session on Oct 22 at G Hotel to find suitable local business partners.

Tan Sri Tengku Razaleigh Hamzah will officiate the event jointly organised by Melvian, Small and Medium Enterprises Association, Meta Ex, and Honor Innovation Sdn Bhd.

“The event is also to commemorate 50 years of Malaysia-China Diplomatic Relations,” he said.

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IC designer Oppstar focuses on talent

 

Oppstar is one the few Malaysian companies in the front-end of the semiconductor industry, offering a full spectrum of IC design services. The chips we design play a prominent role ushering in a new era of digitalization and are used in various industries including telecommunication, consumer electronics, industrial electronics and automotive. 

Oppstar was founded in 2014 by three IC design industry experts, with the vision to become a preeminent global Semiconductor brand in R&D.

Oppstar Technology: We turn today's challenges into ...

“We would like to grow by double digits for our top and bottom line. our talent is our asset and our retention strategy is to pay them a competitive market rate.” Ng Meng Thai

WHILE Malaysia is known as having a strong base in the semiconductor industry, there are not many companies that operate in the higher parts of the sector’s value chain.

That is beginning to change, as a small number of companies are making a successful business out of designing integrated circuits (ICS).

IC designers, as they are called, design chips which are then tested out and manufactured by other parties.

One such IC designer in Malaysia is Oppstar Bhd, which is slated to be listed on the ACE Market in the middle of this month.

Its upcoming listing will see it raising funds mainly for the purpose of hiring more professional engineers.

This is a departure from the norm in the country’s public listing companies’ inclination where most of the funds raised would usually be channeled towards capital expenditure initiatives such as to build factory capacity or to acquire a fixed asset.

IC designers don’t need such assets as their value is in chip designing, which in turn is done by their engineering talent.

Investing in talent would help Oppstar expand its capacity to take on more projects and boost its competitive edge.

The company says it also aims to develop intellectual property (IP) assets with these new hires. The IP is meant to lead to additional income and at the same time improve its market profile.

In its prospectus, Oppstar says some of the IPS it aims to develop are for the RISC-V (or risk-five) based system on a chip. Such a system enables artificial intelligence and machine-learning applications to run on chips.

“These are technical terms in the industry but we can license these IPS separately or incorporate the IPS into future IC design projects,” Oppstar’s chief executive officer Ng Meng Thai tells Starbizweek.

The company would also like to expand into “post-silicon validation services” which would complement its IC design business.

The move would help improve its standing among its peers, says Ng, adding that all these plans would enable it to continue on its strong growth trajectory.

“We would like to grow by double digits for our top and bottom line. Our talent is our asset and our retention strategy is to pay them a competitive market rate,” Ng says.

Oppstar aims to more than double its engineering headcount to 500 from 220 presently and this effort would take up close to half of the funds or Rm50mil raised from its initial public offering (IPO).

Ng claims that demand for the company’s expertise is strong as it wants to expand its geographic reach to India, Singapore and Taiwan with the allocation of about a quarter or Rm25mil of the IPO proceeds.

“From time to time, we receive enquiries from customers. For the next three years or so, we would still need to continue to go out to find more customers to consume our capacity of 500 staff,” he says.

Its customers comprise integrated device manufacturers, fabless and fablite companies, electronic system providers and other IC design houses.

End-industries that require such expertise are the consumer electronics, telecommunications, industrial electronics and automotive sectors.

Its financials showed a gross profit margin of close to 60% and net profit margin of 33% in the financial year 2022 (FY22).

The company says its strong margins are driven by having turnkey design service projects, which command better margins when compared to specific design services.

As at the time of its prospectus issuance, Oppstar’s order book stood at Rm34.29mil, which mainly consists of turnkey design services and is expected to be recognised in the next 12 months.

With zero borrowings, Ng says the company will be in a good position to quickly capture opportunities and have these delivered to its bottom line immediately.

Notwithstanding that, retaining its talent that grants it its competitive advantage is key to its sustenance.

“We notice that younger talent are a bit different in valuing a job from what was considered as good 10 to 20 years ago, as workers then tend to value jobs from multinational companies (MNCS).

“Younger engineers surprisingly now would like to try all the different IC designs before locking themselves down in their career,” he says.

“If you go to an MNC, you would be focused on a very niche and narrow field in IC design. But since we have a broad customer base, our engineers will have the opportunities to experience a variety of design work.

“Also we have overseas customers as some 80% of our revenues are from overseas, so there are a lot of travelling opportunities for them as well,” Ng adds.

He points out that some 14% of the company’s public issue of new shares would be available for its eligible directors, employees and business associates who have contributed to its success.

“This would help us retain some of our talent for the longer term. Last year, we saw a low single-digit rate in the turnover of our manpower.

“The original team of the three founders that started the company have stayed on until now and we grew the employee count to about 220 currently,” he adds.

The company is also eyeing other growth opportunities such as through joint ventures and inorganic ones after its listing. 

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