To Bolster Semiconductor Cooperation, Penang Speaker Calls for Renewing Taiwan-Malaysia Investment Agreement [Interview]
Law Choo Kiang, Speaker of the Penang State Legislative Assembly in Malaysia, said in a recent exclusive interview with CNA that amidst global supply chain restructuring and geopolitical shifts, the "Taiwan Plus One" trend is deepening the symbiotic relationship in the semiconductor supply chain between Taiwan and Malaysia. He emphasized that Penang's semiconductor industry has developed for over 50 years, and renewing the Taiwan-Malaysia investment agreement would further boost the momentum for cooperation.
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- 📰 Published: May 20, 2026 at 12:20
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Law Choo Kiang, Speaker of the Penang State Legislative Assembly in Malaysia, stated in a recent exclusive interview with CNA that Penang's semiconductor industry has been developing for over 50 years. Amid global supply chain restructuring and geopolitical changes, the "Taiwan Plus One" trend is deepening the symbiotic relationship in the semiconductor supply chain between Taiwan and Malaysia. He believes that renewing the Taiwan-Malaysia investment agreement would further enhance the momentum for cooperation.
Penang has garnered significant international attention in recent years due to the global semiconductor supply chain restructuring and is widely regarded as a key technology hub in Southeast Asia. Currently, several industrial parks, including the Bayan Lepas Industrial Park and the Batu Kawan Industrial Park, have formed a complete semiconductor and electronics manufacturing cluster, attracting European, American, and Taiwanese technology companies.
In the exclusive interview with a CNA reporter, Law Choo Kiang analyzed how Penang has risen amidst the global supply chain reshuffle, covering topics from Penang's semiconductor development and the "Taiwan Plus One" trend to semiconductor cluster layouts, talent challenges, and the renewal of the Taiwan-Malaysia investment agreement.
Law stated that Penang's semiconductor development is not a "sudden rise" but has a historical context. In 1972, Intel's first overseas factory was established in Penang, which subsequently attracted related supply chain companies, gradually laying the foundation for Penang's semiconductor industry.
He said that Penang's current success was not achieved overnight but is the result of over half a century of industrial accumulation and supply chain rooting. Today, Malaysia holds about 10% to 13% of the global market for outsourced semiconductor assembly and test (OSAT), with Penang being one of its core clusters.
Regarding the rapid heating up of Penang's semiconductor industry, Law believes that since the US-China trade war, more and more companies are choosing Malaysia to diversify some of their manufacturing processes and supply chain risks due to geopolitical and tariff issues. Malaysia's relatively neutral political and economic environment has quickly become a top choice for businesses.
He expressed that semiconductor and technology companies want to reduce the problem of over-concentrated risks. As multinational corporations re-layout their supply chains, they are unwilling to place their risks in China, making Malaysia and Penang important options.
Law believes that Malaysia has benefited from the "Taiwan Plus One" effect in recent years. As Taiwanese semiconductor companies diversify their supply chain risks, Malaysia, with its complete industrial chain, cost, and geographical advantages, has become a highly cost-effective investment destination.
Speaking on the "Taiwan Plus One" layout trend, Law said that over 30 years ago, when former President Lee Teng-hui promoted the Go South policy, Taiwanese businesses invested heavily in Malaysia, making them very familiar with the industrial environment in Malaysia, especially Penang.
He pointed out that in the semiconductor industry, a large proportion of Taiwanese wafer products are sent to Malaysia for packaging and testing, and then directly exported to the United States and the global market. A closely linked semiconductor supply chain system has been formed among Taiwan, Malaysia, and the United States.
Law stated frankly, "The degree of complementarity between Taiwan and Malaysia in the semiconductor industry even surpasses a typical symbiotic relationship; it's more like a life community." As more related companies move in, it is undeniable that this complementary and symbiotic model will deepen.
Discussing the future challenges for Penang's semiconductor industry, Law said that Penang currently still focuses on back-end processes like packaging and testing. However, due to its complete supply chain and mature cluster effect, it is highly competitive in the global OSAT field.
He stated that Malaysia cannot remain in back-end processes forever. Therefore, the central government has recently promoted the "National Semiconductor Strategy" (NSS) and should actively pursue IC design, moving towards front-end processes and high-value-added areas.
However, Law pointed out that a shortage of high-end R&D and IC design talent remains a significant challenge for Malaysia's semiconductor industry, but this will not hinder investment from related industries.
He said, "Whether it's the central government, state governments, or business owners themselves, they are all trying to bridge this gap through their respective resources, channels, and capabilities."
He believes that many multinational corporations will keep high-end R&D and design in their home countries and use a cross-border division of labor model to deploy some manufacturing processes in Malaysia. The engineering talent that Penang can currently provide is just right to support the needs of back-end processes.
Law pointed out that the most mature semiconductor cluster in Penang is the Bayan Lepas Industrial Park, where companies like Intel and Taiwanese OSAT giant ASE have had a presence for many years. However, the fastest-growing area in recent years is the Batu Kawan Industrial Park, where companies like Micron and T-Flex have successively set up operations. The park is still expanding to accommodate more foreign investment.
He added that besides the two core parks, other areas, including the Prai Industrial Estate and some traditional industrial zones, are gradually upgrading to form an important peripheral supply chain supporting the semiconductor cluster.
Law revealed that Penang also plans to promote the "Silicon Island" project through land reclamation, which will serve as a new base for future high-tech industry development.
Regarding Taiwan-Malaysia investment cooperation, Law believes that as the two sides form a highly complementary relationship in the semiconductor industry, the current investment agreement needs to be updated with the times.
He noted that the Taiwan-Malaysia investment agreement has not been updated for over 30 years since its signing in 1993. The legal environment, technological development, intellectual property rights, and industrial operation models have all changed, making the agreement no longer fully adequate for current needs.
Law stated that updating the agreement's content and establishing a more complete institutional environment would help protect the rights and interests of investors and companies, and further boost the momentum for Taiwan-Malaysia semiconductor cooperation.
He believes that if Malaysia can seize the opportunity of this global semiconductor supply chain restructuring and further integrate with Taiwan's advantages in advanced manufacturing, IC design, and equipment, it will help enhance the competitiveness of Malaysia's semiconductor industry.
Penang has garnered significant international attention in recent years due to the global semiconductor supply chain restructuring and is widely regarded as a key technology hub in Southeast Asia. Currently, several industrial parks, including the Bayan Lepas Industrial Park and the Batu Kawan Industrial Park, have formed a complete semiconductor and electronics manufacturing cluster, attracting European, American, and Taiwanese technology companies.
In the exclusive interview with a CNA reporter, Law Choo Kiang analyzed how Penang has risen amidst the global supply chain reshuffle, covering topics from Penang's semiconductor development and the "Taiwan Plus One" trend to semiconductor cluster layouts, talent challenges, and the renewal of the Taiwan-Malaysia investment agreement.
Law stated that Penang's semiconductor development is not a "sudden rise" but has a historical context. In 1972, Intel's first overseas factory was established in Penang, which subsequently attracted related supply chain companies, gradually laying the foundation for Penang's semiconductor industry.
He said that Penang's current success was not achieved overnight but is the result of over half a century of industrial accumulation and supply chain rooting. Today, Malaysia holds about 10% to 13% of the global market for outsourced semiconductor assembly and test (OSAT), with Penang being one of its core clusters.
Regarding the rapid heating up of Penang's semiconductor industry, Law believes that since the US-China trade war, more and more companies are choosing Malaysia to diversify some of their manufacturing processes and supply chain risks due to geopolitical and tariff issues. Malaysia's relatively neutral political and economic environment has quickly become a top choice for businesses.
He expressed that semiconductor and technology companies want to reduce the problem of over-concentrated risks. As multinational corporations re-layout their supply chains, they are unwilling to place their risks in China, making Malaysia and Penang important options.
Law believes that Malaysia has benefited from the "Taiwan Plus One" effect in recent years. As Taiwanese semiconductor companies diversify their supply chain risks, Malaysia, with its complete industrial chain, cost, and geographical advantages, has become a highly cost-effective investment destination.
Speaking on the "Taiwan Plus One" layout trend, Law said that over 30 years ago, when former President Lee Teng-hui promoted the Go South policy, Taiwanese businesses invested heavily in Malaysia, making them very familiar with the industrial environment in Malaysia, especially Penang.
He pointed out that in the semiconductor industry, a large proportion of Taiwanese wafer products are sent to Malaysia for packaging and testing, and then directly exported to the United States and the global market. A closely linked semiconductor supply chain system has been formed among Taiwan, Malaysia, and the United States.
Law stated frankly, "The degree of complementarity between Taiwan and Malaysia in the semiconductor industry even surpasses a typical symbiotic relationship; it's more like a life community." As more related companies move in, it is undeniable that this complementary and symbiotic model will deepen.
Discussing the future challenges for Penang's semiconductor industry, Law said that Penang currently still focuses on back-end processes like packaging and testing. However, due to its complete supply chain and mature cluster effect, it is highly competitive in the global OSAT field.
He stated that Malaysia cannot remain in back-end processes forever. Therefore, the central government has recently promoted the "National Semiconductor Strategy" (NSS) and should actively pursue IC design, moving towards front-end processes and high-value-added areas.
However, Law pointed out that a shortage of high-end R&D and IC design talent remains a significant challenge for Malaysia's semiconductor industry, but this will not hinder investment from related industries.
He said, "Whether it's the central government, state governments, or business owners themselves, they are all trying to bridge this gap through their respective resources, channels, and capabilities."
He believes that many multinational corporations will keep high-end R&D and design in their home countries and use a cross-border division of labor model to deploy some manufacturing processes in Malaysia. The engineering talent that Penang can currently provide is just right to support the needs of back-end processes.
Law pointed out that the most mature semiconductor cluster in Penang is the Bayan Lepas Industrial Park, where companies like Intel and Taiwanese OSAT giant ASE have had a presence for many years. However, the fastest-growing area in recent years is the Batu Kawan Industrial Park, where companies like Micron and T-Flex have successively set up operations. The park is still expanding to accommodate more foreign investment.
He added that besides the two core parks, other areas, including the Prai Industrial Estate and some traditional industrial zones, are gradually upgrading to form an important peripheral supply chain supporting the semiconductor cluster.
Law revealed that Penang also plans to promote the "Silicon Island" project through land reclamation, which will serve as a new base for future high-tech industry development.
Regarding Taiwan-Malaysia investment cooperation, Law believes that as the two sides form a highly complementary relationship in the semiconductor industry, the current investment agreement needs to be updated with the times.
He noted that the Taiwan-Malaysia investment agreement has not been updated for over 30 years since its signing in 1993. The legal environment, technological development, intellectual property rights, and industrial operation models have all changed, making the agreement no longer fully adequate for current needs.
Law stated that updating the agreement's content and establishing a more complete institutional environment would help protect the rights and interests of investors and companies, and further boost the momentum for Taiwan-Malaysia semiconductor cooperation.
He believes that if Malaysia can seize the opportunity of this global semiconductor supply chain restructuring and further integrate with Taiwan's advantages in advanced manufacturing, IC design, and equipment, it will help enhance the competitiveness of Malaysia's semiconductor industry.