US-China Tensions Fuel Malaysia's Tech Boom, Boosting Economy and Job Growth

KUALA LUMPUR — Malaysia is experiencing a major economic shift, driven by foreign investments in tech and manufacturing amid escalating US-China tensions. Since 2019, Penang has attracted nearly US$44 billion (RM195 billion) in foreign direct investment, tripling its previous decade’s total.

The state is now a global semiconductor hub, home to over half of Malaysia’s chip exports, with major players like Intel and Lam Research investing billions. Penang Chief Minister Chow Kon Yeow called this a “once-in-a-lifetime opportunity” for Malaysia to escape the middle-income trap and become a high-income nation.

Living standards and wages in Penang have surged, with its economic output rising 38% since 2018. Intel’s US$7 billion expansion includes a new facility for advanced 3D chip packaging, while Lam Research is building its largest global campus in the region.

Neighboring Kedah is also benefiting, with Infineon set to open a €7 billion silicon carbide plant next year to meet growing demand for semiconductors. Malaysia, which accounts for 13% of global semiconductor testing and packaging, plays a critical role in the tech supply chain.

Johor, Malaysia’s southernmost state, is rapidly emerging as a data center hub, with US$4.3 billion investments from Nvidia and Microsoft. This growth is fueled by Singapore's moratorium on new data centers and Malaysia’s lower electricity costs, making it an attractive destination for energy-intensive industries.

As Malaysia’s tech sector expands, plans are in place to train 60,000 engineers to meet rising workforce demands, while palm oil giants like SD Guthrie and IOI Corp. are converting plantations into solar farms to support the growing power needs of the tech industry.