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PENANG should consider establishing a dedicated semiconductor institute as a strategic response to the intensifying global pressures on the digitalised electronics sector, particularly amid concerns over potential US import tariffs on manufactured chips.
Former Bank Negara Malaysia assistant governor and commentator Tan Sri Andrew Shen has proposed the concept, highlighting the need for Penang to enhance its role in the semiconductor industry, particularly in emerging areas such as chips powering Artificial Intelligence (AI) and the Internet of Things (IoT).
“The AI and semiconductor revolution is reshaping the twenty-first century, growing from a US$2.5 trillion frontier-technology sector to more than US$16 trillion in less than a decade. At the heart of this transformation are chips – the brains powering every intelligent system,” he said.
Sheng, who was also a Hong Kong–based Malaysian banker and academic, noted that while Penang has made significant strides as a key node in the global electrical and electronics supply chain, there is an urgent need to climb further up the value chain.
“Besides having human capital, Penang also needs a strong government to create an ecosystem which can stimulate growth in the semiconductor industry,” he said, pointing to the risks posed by AI-driven disruption and potential job displacement.
Sheng observed that Malaysia’s historical reliance on natural resources, common among resource-rich nations, may impede innovation and competitiveness.
“Look at East Asian nations such as Japan, South Korea, and China, who have limited or no natural resources. Consider their economies. The blessings of abundant resources may also impede a nation’s desire to be innovative, creative, and enterprising,” he said.
A central theme of the roundtable discussion, hosted by the George Town Institute of Open & Advanced Studies (GIOAS) at Wawasan Open University, was how Penang can transition from manufacturing excellence to leadership in high-end design, AI-integrated engineering, and deep-tech research.
Sheng stressed that Malaysia currently lacks a local indigenous semiconductor champion akin to South Korea’s Samsung, Japan’s Sony, or China’s Huawei, making the institute concept an attractive potential catalyst for sustainable industry growth.
Panellists Dr Kewei Yang, Leonard Tan, Ong Chin Hu, Tan Li Jia, and Assoc Prof Dr Sean Tan Koon Tatt voiced strong support for the initiative, emphasising that a focused institute could elevate Penang’s global competitiveness and encourage innovation in the high-value segments of the semiconductor ecosystem.
Sheng concluded that, while there is no prescriptive solution, a dedicated semiconductor institute could provide the strategic impetus necessary for Penang to emerge as a regional leader in the evolving landscape of AI and advanced chip technology. - December 9, 2025.
