Chip factory of AIC in Kulim
Munich Palm oil was yesterday: In the jungle of Malaysia, the chip factories are now growing upwards. One group after another recently announced billions of investments in the Southeast Asian country.
Malaysia is the preferred location for Western companies that want to produce cheaply in Asia, but deliberately avoid China. Because the US is beginning to restrict high-tech exports to the country. And there is a growing fear in corporations of being deprived of their own know-how in China.
“This is one of the reasons why we chose Malaysia to diversify regionally,” Andreas Gerstenmayer, head of chip supplier AT&S, told Handelsblatt. The listed company is investing 1.7 billion euros in a new factory in Kulim in the north of the country. Never before has the company invested so much money at once.
Like AT&S, many chip companies have recently opted for Malaysia. Infineon, Germany’s leading chip manufacturer, will also build a new factory in Kulim for two billion euros.
Intel CEO Pat Gelsinger has even bigger plans: the engineer is building a chip packaging factory in Malaysia for more than seven billion dollars. The plant is to be launched in 2024, and 4,000 jobs will be created.
The Group has been represented in Malaysia since 1972. It was here that the company had its first overseas location for the further processing of chips. Packing and testing the chips is labor-intensive, so the low wages are an advantage.
According to AT&S CEO Gerstenmayer, there is something else that speaks for Malaysia: “Kulim has a great tradition in microelectronics. There are many suppliers, qualified employees, and the labor costs are also attractive.“
There is a lack of qualified personnel in Europe
Before the choice fell on Kulim, the manager had 200 locations checked worldwide – including in Europe. The result: “Europe is suffering from a glaring shortage of qualified personnel,” says Gerstenmayer. “This not only affects engineers, but is already noticeable among the workers.“ The CEO wants to create 6,000 jobs in Kulim.
In addition, Malaysia has nothing to do with the major geopolitical conflicts on Earth – unlike leading chip locations such as Taiwan, where TSMC is the largest contract manufacturer in the world. The island is considered a renegade province by China. But South Korea, home to the most important memory chip manufacturers Samsung and SK Hynix, is also considered a location with risks. After all, it borders on the politically unpredictable North Korea.
Many chip manufacturers have had good experiences in Malaysia, including Infineon. The Munich-based company opened its first plant in Kulim in 2008. In the middle of the last decade, a second factory went into operation there. In addition, the Group operates its largest chip packaging and testing site in Malacca in the south of the country.
The new, third plant in Kulim will manufacture chips from the promising materials silicon carbide (SiC) and gallium nitride (GAN). Production Board Member Jochen Hanebeck: “We are creating a profitable combination with the Villach Development Competence Center and the cost-efficient production of SiC and GaN power semiconductors in Kulim.“
The high demand for semiconductors contributed to an export record in Malaysia last year. The country delivered goods worth about $ 290 billion abroad – a quarter more than in the previous year. The electronics industry alone accounted for about $ 100 billion of this. The statistics office spoke of an “excellent performance” of the industry, which employed around 575,000 people in 2020. In the chip industry, the country accounted for around 13 percent of global testing and packaging capacities.
But Malaysia is not only attractive for the chip industry: foreign and domestic direct investment in the manufacturing sector increased by 114 percent last year to almost $ 47 billion. Around three quarters of this was accounted for by the electronics industry, as Malaysia’s economic development agency Mida recently announced. Among other things, she highlighted Infineon’s investments in Malacca: these would help to “further strengthen Malaysia’s position as a global semiconductor center”.
The corporations are followed by the medium-sized companies
The government tried to take the step to take into account the importance of factories for global supply chains. But the decision was not without controversy: a research by the financial service Bloomberg in December listed the example of a semiconductor factory with thousands of employees, whose Covid death rate was five times as high as the national average.
Meanwhile, medium-sized companies are also settling in the wake of the large corporations. One of them is the electronics producer Katek from Munich. Chief Executive Rainer Koppitz: “The government is pulling out a leg so that we can invest.” This spring, Katek is opening a location in Penang, not far from Kulim, with 150 employees.
“Malaysia is a very stable country,” says Koppitz. It is also a neighbour of Singapore, the most important hub for many European customers in the region. There are many development departments in Singapore for which the company will work in the future. Katek will manufacture prototypes and small series in Penang. Koppitz intends to expand the site vigorously in the next few years.
