Malaysia Eyes AI Growth Amid US-China Tensions

As the US-China rivalry intensifies, Malaysia sees a unique opportunity to establish itself as a major hub in artificial intelligence (AI) and semiconductors. Austrian tech firm AT&S recently invested $1.8 billion in its new plant in Kulim, Malaysia. Opened in January 2024, the facility is set to employ around 6,000 people, producing substrates vital for AI technology.

This strategic investment aligns with many firms' efforts to diversify production away from China. AT&S, previously reliant on its two Chinese plants employing over 9,000 workers, is following a "China Plus One" strategy to mitigate geopolitical risks and supply-chain disruptions triggered by US-China trade tensions and the COVID-19 pandemic.

Malaysia's neutral geopolitical stance, coupled with its developed infrastructure, skilled workforce, and proximity to global tech companies like AMD, makes it attractive. 

The Malaysian economy grew 5.1% in 2024, outpacing regional neighbors like Thailand and Indonesia, prompting optimism that Malaysia might reach its high-income status goal well ahead of the 2030 target.

Leading global tech players Amazon, Microsoft, ByteDance, and Google are expanding significantly, establishing new data centers. Microsoft alone forecasts its new data centers near Kuala Lumpur will create over 37,500 jobs and generate approximately $10.9 billion in revenue by 2028.

What Does This Mean for Me?

Despite talent shortages—local universities currently produce only 5,000 engineering graduates annually against industry needs of 50,000—Malaysia remains confident. Recent initiatives, including a partnership with UK-based Arm, reflect its ambitious goal to develop indigenous AI chip technologies, highlighting Malaysia's strong potential in a market reshaped by ongoing global tensions.