Malaysia's semiconductor industry in crisis: The impact of China's geopolitical tensions and how to mitigate the damage

However, the current global semiconductor crisis is causing significant damage to our economy and industries. The crisis, caused by surging demand for semiconductors and supply chain disruptions, is hitting Malaysia hard and it is imperative that we take immediate action to mitigate the damage.

It is no secret that China's behaviour is playing a huge role in exacerbating this crisis. Their economic policies and territorial claims in the South China Sea are causing disruptions in international trade and supply chains. Furthermore, their aggressive stance towards Taiwan, a major supplier of semiconductors, is putting our economy at risk. Taiwan supplies around 20% of the world's semiconductors and the uncertainty in the relationship between China and Taiwan is causing delays and shortages in the delivery of these crucial components to countries like Malaysia.

To weather this crisis, Malaysia must take a multi-faceted approach that addresses both the short-term and long-term challenges we face. In the short-term, we must look for ways to mitigate the impact of the semiconductor shortage on our economy and industries. One way to do this is to diversify our supply chain, by sourcing semiconductors from multiple suppliers instead of relying heavily on a single supplier. This can help to reduce the risk of disruptions to the supply chain and ensure that Malaysia has access to the semiconductors we need to keep our industries running.

In the long-term, we must also look for ways to address the underlying causes of the semiconductor shortage. One of the main causes of the current shortage is the strong demand for semiconductors, driven by the growth of new technologies such as 5G and electric vehicles. To meet this growing demand, we must invest in research and development to create new and innovative semiconductor technologies. Additionally, we must also work to improve our education and training programs to ensure that we have a skilled workforce that is able to design and manufacture the next generation of semiconductors.

Furthermore, Malaysia should also consider taking a stand on the geopolitical situation between China and Taiwan. We must make it clear that we will not stand idly by while China's behaviour risks more damage to our semiconductor industry. We must maintain good relations with both China and Taiwan in order to ensure that we have access to a stable and reliable supply of semiconductors. Additionally, the government should also actively seek to develop trade and economic ties with other countries to diversify its supply chain and reduce its dependence on any one country.

On the domestic front, the government should also provide incentives and support to companies that invest in domestic semiconductor manufacturing. This could include tax breaks, subsidies, and access to funding and other resources. By building its own semiconductor manufacturing capabilities, Malaysia can reduce its dependence on foreign suppliers and increase its resilience to disruptions in the global supply chain. Additionally, domestic semiconductor manufacturing can also help to create jobs and boost economic growth in Malaysia.

In conclusion, the global semiconductor crisis is a significant challenge for Malaysia and it is imperative that we take immediate action to mitigate the damage caused by this crisis. The Government must not continue to skirt around risky behaviour by foreign powers that is potentially damaging to our economy and take a firm stand, because by only doing so can the lives and livelihood of Malaysians be secured.

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* Rahman Hussin closely monitors the affairs of public management, politics and stakeholders. Through his own firm, he serves various clients focusing on strategic and government affairs.