Malaysian semiconductor design firms still face significant capital constraints

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Malaysian chip design firms and capital challenges

Highlights

Malaysian semiconductor design firms such as Xenith Technology and Oppstar Technology received ARM tokens worth RM30 million–RM40 million, but capital constraints remain high.
Chip development costs remain around U.S.$50 million for simpler chips and up to U.S.$300 million for complex architectures over two to two and a half years.
A total of 22,849 highly skilled workers had been trained as of the third quarter of 2026 under the National Semiconductor Strategy, with a target of 60,000 engineers by 2030.

This article was translated from the original. Read the original version by our correspondent here.

ARM access and chip development costs

As reported by The Edge Malaysia, Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani told the Dewan Rakyat that high capital requirements continue to constrain local semiconductor design firms, even as the government provides subsidised access to UK-based ARM Holdings PLC’s design blueprints.

He said Xenith Technology, SkyeChip, GreatAsic Technology and Oppstar Technology had been granted Compute Subsystem tokens under an initiative introduced by the Ministry of Economy in 2025. According to him, the subsidised access is worth between RM30 million and RM40 million and helps Malaysian companies complete new chip designs faster and at lower cost.

Johari said receiving the tokens could save up to two years in the development process and accelerate efforts to build proprietary intellectual property. So far, four of the seven CSS tokens and four of the 25 AFA tokens have been allocated, but the overall cost of completing a chip design remains high, at around U.S.$50 million for simpler chips and up to U.S.$300 million for more complex architectures over two to two and a half years.

Investment incentives and industry talent challenges

Johari was responding to a question from Datuk Dr Ku Rahman Ku Ismail regarding cooperation with Arm Holdings and the New Incentive Framework, introduced by MITI and the Malaysian Investment Development Authority in March to attract higher-quality investments. He said tax exemptions under the framework use an outcome-based approach, focusing on high manufacturing complexity, reducing reliance on low-skilled foreign labour, robust domestic supply chains and the creation of high-income jobs.

Under the National Semiconductor Strategy, a total of 22,849 highly skilled workers had been trained as of the third quarter of 2026, with a target of training 60,000 engineers by 2030. Johari also said starting salaries for technicians are around RM3,000 and RM3,500 for junior engineers, while engineering managers can earn between RM12,000 and RM25,000, and IC design and research and development specialists between RM8,000 and RM25,000, depending on experience.

He acknowledged that salary offers in Singapore, South Korea, Taiwan or the UK can be two to three times higher, but stressed that the cost of living in Malaysia remains relatively lower. At the same time, MITI is coordinating with the Ministry of Human Resources, the Ministry of Higher Education, educational institutions and industry players to collect job placement data by subsector and assess talent retention levels.

In our earlier coverage of the 2027 Budget allocation for the semiconductor sector, we explained how government funds are targeted at helping local companies move up the value chain, including through integrated circuit design and stronger R&D. The article also highlighted the importance of strengthening domestic supply chains, ensuring investment projects are implemented on time, and translating higher productivity into wage increases and skilled job opportunities.

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