Malaysia’s semiconductor industry is benefiting from accelerating China+1 supply chain diversification, deeper localisation by global semiconductor equipment makers and rising demand for optical and power semiconductors tied to artificial intelligence (AI)-driven data centre expansion.
According to a recent report by Hong Leong Investment Bank Research, Malaysia’s outsourced semiconductor assembly and test (OSATs) largely sat out the first leg of the AI upcycle in 2024-2025 (driven by Graphics Processing Unit [GPU]/High Bandwidth Memory [HBM] demand), tracking instead the protracted analog downcycle as post-pandemic inventory correction weighed on soft auto/industrial demand.
“We see 2026 as the inflection point. As AI DC buildout accelerates, high-performance power management chips are emerging as the new demand driver for analog suppliers, therefore offering a new growth vector for Malaysia OSATs as well,” the research house said noted.
According to it, the reason is straightforward – AI server racks are becoming denser and more power-hungry (from 120-150kW to 600-1,000kW eventually), necessitating more power semi content across the entire power delivery chain.
Efficient power delivery is increasingly a binding constraint in AI DC deployment, and ongoing architectural shifts are structurally expanding addressable content./.
Source: Vietnam+
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<p>Time: November 2025<br /> By: WTO and International Trade Group, Legal Department – VCCI</p>
