BUDGET 2026 SETS STAGE FOR ‘MADE BY MALAYSIA’ SEMICONDUCTOR LEADERS – MSIA URGES FAST EXECUTION

BUDGET 2026 SETS STAGE FOR ‘MADE BY MALAYSIA’ SEMICONDUCTOR LEADERS – MSIA URGES FAST EXECUTION

Kuala Lumpur, 10 October 2025 – The Malaysia Semiconductor Industry Association (MSIA) welcomes Budget 2026, tabled by YAB Dato’ Seri Anwar Ibrahim, as a continuation of Malaysia’s drive toward a high-value, innovation-led economy anchored by the semiconductor industry.

This year’s Budget shows clear progress in aligning fiscal priorities with the semiconductor industry’s strategic needs. It reflects many of MSIA’s earlier recommendations – including deeper support for semiconductor investments, talent development, and supply-chain strengthening.

However, MSIA also calls for swift, coordinated execution to ensure these measures deliver tangible results and position Malaysia as a true “Made by Malaysia” innovation leader in the global value chain.

“Budget 2026 demonstrates a clear intent to strengthen Malaysia’s semiconductor foundation, but what matters now is execution – turning allocations into action, ensuring that local players can move up the value chain, and making ‘Made by Malaysia’ a global mark of trust and innovation,” said Dato’ Seri Wong Siew Hai, President of MSIA.

1. From Commitment to Capability: Malaysia Must Deliver on Semiconductor and High-Tech Investment

MSIA welcomes the Government’s decision to channel RM550 million through Khazanah and KWAP into semiconductor ecosystem partnerships, alongside RM500 million in BPMB loans to support high-value R&D and design activities.

The creation of SemiconStart, a new incubator programme for semiconductor startups, is a positive and timely initiative to help build Malaysian champions in the electrical and electronics (E&E) sector. This aligns with the National Semiconductor Strategy (NSS), which aims to create 110 Malaysian champions.

During the 1st Anniversary of the NSS at the ASEAN Semiconductor Summit organised by MSIA in July 2025, the Prime Minister announced that 13 companies have already been identified as early progress toward that target a promising start.
Dato’ Seri Wong emphasised that “the journey to becoming a global Malaysian company is not easy, and companies will require a facilitative and supportive government, a vibrant ecosystem, and an innovative culture and mindset.”

He noted that challenges exist at every stage – from startup to MSME, mid-tier, large local company, and ultimately, global Malaysian champion.

The effectiveness of SemiconStart will depend heavily on the scope and reach of the global incubator partner, particularly in providing:
• Access to foundry PDK (Process Design Kit) and MPW (Multi Product Wafer) for advanced node designs,
• OSAT (Outsourced Semiconductor Assembly and Test) access, and
• Design infrastructure support, including computing power and EDA tools.

These resources are typically inaccessible to startups, and obtaining them through the incubator will be a major equaliser. However, clarity is needed on whether the incubator will also provide packaging solutions to enable full prototype development once wafers return from fabrication.

Dato’ Seri Wong further highlighted that such initiatives must be supported by adequate early-stage funding to bring projects from concept to product design – both in IC design and advanced packaging.

Equally important is early customer engagement, ensuring that products are developed for real market opportunities and not in isolation from commercial demand.

2. Malaysia’s Talent Push Is Timely – But Speed and Industry Coordination Will Define Success

The RM7.9 billion allocation for TVET, including RM650 million focused on AI, EV, and semiconductor training, reflects the Government’s recognition of the talent challenges facing Malaysia’s high-tech industries.

MSIA supports this investment and reiterates the importance of aligning training programmes with industry needs to ensure graduates are job-ready for smart manufacturing and semiconductor design.

A stronger and more integrated Semiconductor Talent Roadmap will be vital to meeting NSS goals and sustaining Malaysia’s position in advanced technology sectors.

3. Strengthening Local Supply Chains – Moving in the Right Direction

The introduction of the RM200 million Strategic Co-Investment Fund and RM180 million NIMP Industrial Development Fund is an encouraging step toward building a more resilient and inclusive supply chain, particularly for SMEs and mid-tier companies.
MSIA highlights that clarity in fund access and execution will be crucial so that capable Malaysian firms can participate in global value chains, scale their technology capabilities, and integrate more deeply with multinational corporations operating in Malaysia.

4. Infrastructure, Connectivity, and Investment Facilitation – Key Enablers That Must Deliver

Initiatives such as the RM2 billion MADANI Submarine Cable (SALAM) project, logistics and airport upgrades, and the ASEAN Business Entity (ABE) status and Investor Pass schemes will help strengthen Malaysia’s industrial infrastructure and investment ecosystem.

MSIA emphasizes that policy consistency, reliable energy supply, and timely project delivery are essential to maintain investor confidence and enable continuous semiconductor growth.

5. Innovation and Commercialization – Realizing the ‘Made by Malaysia’ Ambition

The RM200 million Innovation Commercialisation Fund, enhanced venture-capital tax incentives, and the ‘Made by Malaysia’ certification programme are timely steps toward a design-led, innovation-driven industry.

These instruments must now be implemented effectively to support commercialisation of local semiconductor IP, component design, advanced packaging and advanced technology equipment, ensuring Malaysia’s innovation base grows alongside its manufacturing strength.

MSIA’s Outlook and Call to Action

Budget 2026 lays a strong foundation for Malaysia’s semiconductor future.

The next phase must focus on delivery, depth, and coordination – ensuring Malaysia moves beyond assembly and testing into design, R&D, advanced manufacturing and equipment leadership.

• Fast-track implementation of the National Semiconductor Strategy (NSS) with measurable milestones.
• Strengthen talent partnerships between companies, universities, and TVET institutions.
• Empower local SMEs through co-investment and ecosystem integration.
• Access to appropriate funding to encourage innovation in the semiconductor & advanced equipment value chain.
• Reinforce energy security and infrastructure for advanced manufacturing zones.

Issued by:

Malaysia Semiconductor Industry Association (MSIA)
Date: 10 October 2025

For media enquiries, please contact MSIA correspondence:

MSIA Secretariat
Email: secretariat@msia.org.my

Ms. Faz Adnan
Senior Manager, Malaysia Semiconductor Industry Association
Email: faz.adnan@msia.org.my