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Research shows that Malaysia’s E&E industry is well-positioned

According to a recent news report, the global semiconductor industry is expected to record another healthy year. This growth is said to be driven by the rapid expansions of the internet of things (IoT) industry, analysts viewed Malaysia’s electrical and electronics (E&E) sector as “well-positioned” in this highly demanding global tech supply chain.

The research team at one of the largest investment banks in Malaysia highlighted that the global semiconductor market revenue should grow in 2018 and thereafter stay at a healthy pace supported by the megatrend of the IoT that has multiple applications and increasing use of wearable gadgets, smart home applications, automotive industry, and the use of artificial intelligence (AI) technologies.

According to the research published, the country’s E&E sector is expected to continue playing a pivotal role. With a growing focus on integrated circuit (IC) design innovation and the adoption of Industry 4.0, this paves the way to move up the value chain.

As such, the researchers stressed that the nation’s decision-makers should focus on IC design innovation and the adoption of Industry 4.0 with the aim to move up the value chain. The introduction of mid-range smartphones, IoT devices and the adoption of electronic functions in the automotive industry should drive demand for semiconductors, integrated circuits and printed circuit board assembly (PCBA) products, popularly also known as electronic motherboards.

Aside from that, the research pointed out that the Asia Pacific and in particular China and India would dominate the smart display market for the automotive industry while the current US-China trade war should have a positive impact on Malaysia.

It was noted that Malaysia’s E&E sector has successfully positioned itself in the global supply chain of electronic manufacturing services, outsourced semiconductor assembly and testing as well as in research, design and development.

The research group noted that they foresee the industry flourishing as it moves ahead supported by several megatrends. The group projects that the average annual growth for E&E segment will be around 9.6 per cent between 2018 and 2022. Growth will be supported by the electronics segment which the group forecasts at 13 per cent between 2018 and 2022.

The arrival of Industry 4.0 has also allowed the use of AI, machine learning (ML) and the IoT in our daily lives.

It was also noted that digital lifestyle and the digital economy, which fall under the ‘New Millennium’ will continue to support the explosive growth in the areas of e-commerce, e-mobility and e-healthcare.

The group added that to some degree, Malaysia’s local E&E industry is able to leverage these megatrends which offer strong demand for state-of-the-art hardware, along with the diversification into the areas of design and development (D&D), shared services covering human resource, finance and information technology as well as supply chain management for regional and global logistics hubs.

To unlock greater productivity in this sector, the research team suggested that local players need to move up the value chain and be globally competitive.

The country’s local players currently face strong competition from the regional players coming from Vietnam, China and Thailand who are also leveraging this sector to stimulate their economic growth, the research added.

Thus, the research stated that the country needs to work to attract more MNCs and large local companies with the aim for them to set up D&D and at the same time assist local SMEs to grow in this sector is vital.

The research also noted that besides developing their capabilities in areas such as R&D and business development, they also need to move across all industrial segments that use E&E components such as automation, industrial electronics, semiconductors, electronics manufacturing services, storage, light emitting diode, solar and IoT.

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