Malaysia is on the brink of a technological revolution, striving to establish itself as a prominent global tech hub. The states of Penang, Selangor, and Johor are at the forefront of this transformation, aiming to enhance the nation’s semiconductor and data centre capabilities, ultimately boosting the economy and attracting significant foreign investment.

The burgeoning demand for technological expertise has escalated competition for tech talent, not just within Malaysia but across the Asian continent. As Malaysia seeks to build a robust end-to-end supply chain in semiconductor production — including front-end chip manufacturing and integrated circuit design — it is essential that the country addresses the infrastructure and sustainability challenges that accompany this growth.

Penang: The “Silicon Valley of the East”

Penang, recognized as the “Silicon Valley of the East,” has been a leader in the semiconductor sector for over 50 years and currently hosts more than 350 multinational corporations (MNCs). The state’s Chief Minister, Chow Kon Yeow, has announced a vision to create the first complete supply chain for front-end semiconductor manufacturing in Southeast Asia. With ambitious plans to attract investments of approximately US$115 billion (around RM492 billion) by 2030, Penang aims to upgrade its infrastructure to support this growth.

To accommodate the anticipated spike in demand, a major 275 kV overhead power transmission line is nearing completion, which is expected to enhance electricity supply from the mainland to Penang Island. Currently, the peak demand on the island stands at about 800 to 1,000 MW, and the new line will provide a capacity of 2,000 MW, ensuring sufficient energy for upcoming developments, such as the Silicon Island project.

However, the spike in semiconductor activity has resulted in a critical water shortage. Penang is investing RM1.18 billion to improve its water infrastructure, recognizing that a reliable supply of water and electricity is vital for the semiconductor industry — as even brief outages can lead to substantial financial losses.

Selangor: The Hub for Integrated Circuit Design

Selangor, particularly the Klang Valley region, is set to play a pivotal role in the integrated circuit (IC) design sector. This urban area, which includes Kuala Lumpur, is populated by over 9 million young professionals, creating a strong talent pool for the tech industry. The government has committed to establishing an IC design park annually for the next five years, with a goal of fostering at least five unicorn companies, valued over US$1 billion, by 2030.

Despite these ambitious targets, Malaysia is grappling with a shortage of skilled labor in the science and technology fields. Currently producing just 5,000 engineering graduates per year, the country falls short of the estimated 50,000 engineers required to support the semiconductor industry. To combat this shortfall, the government is setting a target of generating 60,000 engineering graduates within the next five years.

Johor: Data Centre Powerhouse

Johor has emerged as a key player in Malaysia’s tech ambitions, particularly in the realm of data centres and manufacturing facilities. With over 50 applications for data centres submitted and 10 now operational, the state has attracted the highest investment in this sector. Notably, Singapore’s Princeton Digital Group has reported remarkable growth in its 130-megawatt data centre project in Johor, which was completed within a year, thanks in part to strong governmental support.

However, the rapid expansion of data centres raises legitimate concerns about sustainability. Local residents worry about the implications of increased energy and water consumption that accompany these developments. To address these concerns, experts emphasize the importance of implementing eco-friendly technologies in new projects to mitigate environmental impacts.

Conclusion: A Collective Effort for a Sustainable Future

As Malaysia pushes forward with its ambitious plans, the cooperation between state governments, private sectors, and educational institutions will be crucial to meet the growing demand for tech talent and ensure sustainable development. The transformation of Penang, Selangor, and Johor into global tech hubs presents a remarkable opportunity for Malaysia, but only if they can balance growth with environmental and resource sustainability.

Stay tuned as this story develops — Malaysia is poised to make waves in the global tech landscape, and you won’t want to miss a moment of it!