Economy

AI is set to transform the financial planning industry, but human judgment, trust, accountability will remain irreplaceable 

by SHAUQI WAHAB 

EXPERTS are urging financial planning professionals to rethink wealth management beyond returns and legal structures, with industry leaders warning that artificial intelligence (AI) disruption, behavioural biases and evolving family dynamics are reshaping the future of financial advisory services. 

At the Financial Planning Association of Malaysia (FPAM) Annual Signature Financial Planning Symposium 2026 recently, experts stressed that trust, human judgement, succession planning and behavioural understanding will remain critical despite growing digitalisation and technological change. 

Compassion in Estate, Succession Planning

Inheritance and succession planning must go beyond legal documents and financial structures to address the human realities that often shape family disputes. 

Wong Lu Peen & Tunku Alina’s inheritance and succession lawyer Farah Deba Sofian said estate planning is not merely about distributing wealth after death, but also about preserving relationships, family values and long-term harmony across generations. 

Farah Deba said the growing complexity of modern families, cross-border marriages and differing legal systems have made succession planning increasingly challenging. 

While financial planners and lawyers can build sophisticated structures such as trusts, family offices, foundations and family constitutions, the biggest challenge remains the human factor behind wealth ownership and inheritance. 

“Structure is a form and human factor is really the substance,” Farah said in the ‘Challenges in Planning for the Future Generations: The Unknown Factor in Private Wealth’ session at the symposium. 

Estate planning ultimately involves balancing legal rights with compassion, empathy and family dynamics. 

Farah Deba warned that family disputes can drag on for years despite clear legal frameworks, citing one inheritance case that began in 2014 and remains unresolved in court due to suspicion and conflict among family members. 

Delays in estate distribution are often worsened by changing family needs, remarriages, blended families and disputes over fairness. 

The complications arising from mixed marriages, cross-border unions and differing applications of Islamic and civil law across jurisdictions. 

Marriages recognised in one country may face procedural issues in another, while unregistered marriages can create legal uncertainty during inheritance claims, divorce proceedings or child custody disputes. 

Several real-life cases to illustrate how succession conflicts are often deeply emotional rather than purely financial. 

In one case, a non-Muslim grandmother who cared for her ill Muslim son decided to donate his organs after his death without consulting his estranged grandson, who was legally entitled to inherit the estate. 

Through mediation and family discussions, the son later relinquished his inheritance rights after reflecting on his absence during his father’s illness. 

“If you talk about fighting about rights, there is no end to it. Money is king, but there are values that come with the money.” 

Farah Deba urged advisors and financial planners to encourage clients to look beyond rigid legal entitlements and instead focus on maintaining family bonds and compassion. 

Islamic principles, family values and local laws must often be balanced carefully, especially in multicultural and multi-jurisdictional settings. 

The realities of evolving family structures, including adopted children, blended families, single parents and same-sex relationships, saying succession planning must adapt to modern social realities even as traditional legal systems continue to evolve. 

On family businesses and multi-generational wealth, she said succession planning requires balancing the interests of family, ownership and business operations, all of which may evolve differently across generations. 

Governance tools such as family charters and constitutions are useful, but their effectiveness ultimately depends on how values are passed down within the family. 

“Family charter is not binding, it’s family values. It is how you teach your children the value of money and how you teach them to respect someone you disagree with.” 

Farah Deba cautioned against blindly pursuing high-return investment structures without understanding the regulatory and fiduciary implications. 

Advisors must always act in the best interests of clients and ensure wealth planning strategies remain legally and ethically sound. 

AI Will Redefine Financial Planners, Not Replace Them

AI is set to transform the financial planning industry, but human judgment, trust and accountability will remain irreplaceable. 

FPAM president Anil Singh Gill said Malaysia’s financial sector is rapidly embracing AI-driven tools as regulators and industry players push for greater digital adoption and financial inclusion. 

The Securities Commission Malaysia (SC) has already incorporated AI and digitalisation priorities into its Capital Market Masterplan. 

AI has evolved beyond large language models such as ChatGPT into “agentic AI”, where systems are capable not only of generating recommendations but also executing tasks autonomously. 

These tools can greatly improve efficiency for financial planners by analysing customer data, automating workflows and generating personalised recommendations at scale. 

However, Anil warned that AI systems are still vulnerable to errors, misinformation and algorithmic bias, making human oversight essential in financial decision-making. 

“AI does hallucinate. If you use any programme today whether it’s Gemini or Chatgpt, you will see at the bottom results may vary and you cannot trust all the output of the model. 

“This means that it can actually give the wrong recommendation, ingesting the wrong data or even the right data, and the output can still be wrong,” he explained during the ‘Financial Planning in the Age of AI: Navigating Risks while Protecting the Client-Planner Relationship’ session. 

Financial planners cannot rely entirely on AI-generated advice, especially in areas involving legal liability, suitability assessments, and fiduciary responsibility. 

Instead, advisors must verify recommendations, maintain audit trails and ensure that every decision remains explainable to clients and regulators. 

Growing concerns over data privacy and cybersecurity, particularly under Malaysia’s 

Personal Data Protection Act (PDPA). Financial institutions and advisors must ensure customer data remains protected from breaches, scams and misuse as AI systems become increasingly integrated into financial services.

Beyond technical compliance, Anil argued that the future success of financial planners will depend on their ability to combine AI literacy with emotional intelligence and client trust. 

“AI provides telemetry. It provides a path, but customers are paying you to hold the controls, read the room and land the plane safely,” he said. 

Throughout the session, he encouraged financial professionals to build new competencies such as data literacy, systems thinking, and AI fluency. 

Anil urged planners to actively experiment with AI tools like ChatGPT and Gemini to better understand both their strengths and limitations. 

Growing concerns that AI could eventually replace human advisors, comparing today’s AI revolution to the introduction of Microsoft Excel in the 1980s. 

Rather than eliminating jobs, technology would likely enhance productivity and reshape professional roles. 

While AI can process vast amounts of information faster than humans, financial planning ultimately remains a people-centric profession built on trust, accountability and human understanding. 

Human Behaviour Takes Centre Stage in Financial Planning 

Financial planning is no longer just about numbers, products or investment knowledge, but increasingly about understanding human behaviour, emotions and decision-making patterns. 

Institute for Capital Market Research Malaysia (ICMR) senior research analyst Nadhirah Ibrahim said many Malaysians are already aware of the importance of saving, investing early and budgeting, yet often fail to follow through because financial decisions are heavily influenced by emotions, social pressures and behavioural biases rather than a lack of information. 

She acknowledged that people are easily swayed by trends, lifestyle spending and social media influences despite knowing better financial habits. 

“The challenge is really not information, but behaviour,” she said during the ‘The Psychology of Money: What Really Drives Financial Decisions?’ session. 

Behavioural science could help financial planners guide clients more effectively through small but meaningful interventions, or nudges, such as automating savings, setting reminders and simplifying financial goals into smaller, more achievable targets. 

Instead of overwhelming clients with abstract long-term goals like retirement or six months of emergency savings, advisors should make financial planning more relatable and emotionally attainable. 

Good financial planning is no longer just about providing the right advice, but about helping clients adopt the right behaviours. 

Advisors should move beyond simply telling clients to invest, save or diversify and instead help them build systems and habits that make positive financial actions easier to sustain. 

“Good financial planning is not only about giving the right advice, but about helping make the right behavior easier.” 

The growing role of AI in financial planning, describing it as a powerful but potentially risky tool. 

While AI can speed up research, data analysis and administrative work, she cautioned that technology alone cannot fully understand human emotions such as shame, fear, regret and cultural influences that often shape financial decisions. 

She warned that excessive reliance on AI could reinforce overconfidence and unhealthy financial behaviour, particularly as AI systems increasingly personalise responses based on users’ emotions and preferences. 

This strengthens the role of human financial advisors rather than replacing them. 

“Humans are not spreadsheets. In the past, financial advisors were valued for what they knew. But in the future, you will be valued for how well you understand people,” she advised. 

Nadhirah emphasised that financial advisors must become more behaviour-aware and relationship-driven, especially when engaging younger investors who increasingly prioritise authenticity, transparency and emotional connection over hard-selling tactics. 

Trust, empathy and accountability would become even more valuable in the AI era, where clients are searching not only for financial expertise, but also for genuine human guidance. 

The future financial advisor would evolve into a “behaviourist with a financial license”, combining technical expertise with emotional understanding to help clients make better long-term financial decisions. 

Financial Planners Urged to Focus on Trust, Resilience, Human Connection

Financial planning professionals must move beyond chasing investment returns and instead focus on resilience, trust-building and emotional guidance as clients face growing uncertainty in today’s economic landscape. 

A panel discussion highlighted how geopolitical tensions, inflation, social media influence and policy uncertainty are reshaping client behaviour and the advisory profession itself. 

Kenanga Investment Bhd CEO Datuk Ismitz Matthew De Alwis said the biggest challenge today is keeping clients committed to long-term financial plans during volatile periods. 

“A plan is no longer just about returns, it’s about resilience, sustainability and legacy,” he said, stressing that planners must now act not only as advisors but also as emotional anchors for clients navigating uncertainty. 

Meanwhile, Whitman Independent Advisors Sdn Bhd VP of client advisory Teh Jiansheng warned that social media and unverified online advice have increased misinformation and scams, making professional guidance more important than ever. 

“We will only take clients on board if they are ready to make a change,” he said. 

As for IPP Wealth Managers Ltd investment strategy director Sedek Jantan, policy uncertainty, particularly surrounding global economic shifts and changing US trade strategies, is creating panic among investors and pressure on advisors. 

Once a financial plan is in place, the focus should no longer be solely on investment returns. 

Instead, the plan should align with the client’s personal life and circumstances, allowing any challenges that arise along the way to be addressed more effectively. 

“The problem today is not market volatility, but the misread of structural change,” he said. 

Additionally, Buffalo Investment Agency founder Terence Ng said investors are increasingly overwhelmed by excessive information and fear-driven narratives online, causing hesitation in making financial decisions. 

The challenge is to convince the client to continue on the execution, as constant influx of new information makes them second-guess their plans. 

“Try not to interpret the headline, but provide what is the possible risk and what is the possible opportunity and give the client the right to choose whether they want to stay invested or not,” he advised. 

The panel also agreed that while AI and technology can enhance analysis and efficiency, human advisors remain essential in providing trust, personalised guidance and long-term support throughout a client’s financial journey. 

iFAST Capital Expands Fintech Ecosystem With New Payment, Bond Solutions

iFAST Capital Sdn Bhd is strengthening its role as a fintech-driven investment and advisory platform by offering integrated financial solutions for both advisors and retail investors. 

Its investment counsellor Bushan Radhiburman said the company operates through both B2B and B2C channels, with advisors using its platform to access investment products while retail users utilise the FSMOne platform. 

The platform provides access to unit trusts, stocks, exchange-traded funds (ETFs) across six global markets, bonds, insurance products and managed portfolios through a single ecosystem. 

“On our platform alone, you can actually have access to most of the unit trust in Malaysia, stocks and ETF in six different markets, bonds, insurance and also our own managed portfolios,” he told The Malaysian Reserve (TMR). 

iFAST’s fintech capabilities extend beyond investment access, citing its involvement in backend infrastructure such as the Employees Provident Fund (EPF) i-Invest system and investment features integrated into Shopee Money. 

Bushan said the company’s research-driven approach helps advisors remain product-neutral while delivering fiduciary-based advice to clients. 

Among its upcoming developments is iFAST Pay, which will allow users to invest, save and spend within a single ecosystem through a payment card feature currently undergoing final testing before launch. 

“It will be something similar to Touch ‘n Go, where clients can invest, save and also spend within the same ecosystem,” he explained. 

Bond Supermart, describing it as Malaysia’s only bond exchange platform that enables retail investors to buy and sell bonds or sukuk directly online with minimum investments as low as RM1,000 for government bonds. 

The platform improves transparency and accessibility by replacing traditional over-the-counter processes with a fully digital marketplace. 

Thaleon AI Eyes Regional Expansion as Demand Grows for Smarter Financial Advisory Tools

Thaleon AI is looking to transform the financial planning industry through AI by helping advisors deliver faster, more personalised and data-driven investment recommendations. 

Chief strategy and operations officer Ject Ng said the company, established in 2025 through a strategic partnership with Morningstar Inc., was created to address productivity challenges faced by financial planners who must process vast amounts of client, market and product data continuously. 

“AI is very good at going through data. As a human advisor, you may only understand 50 investment products, but AI in our system can understand more than 3,000 funds at the same time,” he told TMR. 

Thaleon AI’s platform combines market research, client profiling, company policies and advisor preferences into a single system to help advisors build more suitable investment portfolios efficiently. 

The technology allows financial planners to focus more on relationship-building and personalised advice instead of spending excessive time analysing information manually. 

Despite the growing use of AI, he stressed that human advisors remain essential in the financial planning process because trust, communication and experience cannot be fully replaced by technology. 

“The AI can summarise all the data for you, but it is the experience of the advisors that will make the final judgment.” 

Ng noted that many financial planners struggle to personalise recommendations due to time constraints and human limitations, often relying on generic approaches instead of tailoring solutions to individual client needs and circumstances. 

Thaleon AI aims to help advisors save time on technical tasks so they can focus on building stronger client relationships and trust. 

Personalisation as a critical factor in modern financial planning, comparing it to recommendation algorithms used by streaming platforms such as Netflix. 

Thaleon AI also plans to expand beyond Malaysia as part of its long-term growth strategy while continuing to strengthen partnerships with asset management firms and financial institutions. 

Investors should avoid chasing returns blindly and instead focus on suitability when building investment portfolios. 

“The best investment portfolio for anyone is the one that is suitable for you,” Ng said.

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• This article first appeared in The Malaysian Reserve weekly print edition

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TOKYO — Malaysia and Japan can make a meaningful contribution to strengthening regional supply chains, particularly in semiconductors, Prime Minister Datuk Seri Anwar Ibrahim (picture) said today.

He said Malaysia’s strengths in assembly, testing and advanced packaging complement Japan’s leadership in materials, equipment and advanced manufacturing, creating opportunities to build more resilient and integrated technology ecosystems.

“This is where Malaysia and Japan can make a meaningful contribution,” he said at the Nikkei Forum on “Navigating Strategic Uncertainty”, held as part of the 31st Nikkei Forum under the theme “Working Together for a More Resilient and Prosperous Asia” here.

In energy, Anwar said the partnership could support Asia’s transition to a lower-carbon future while maintaining economic growth and energy security.

He added that initiatives such as the Asia Zero Emission Community show that sustainability and development can advance together.

On the digital economy and artificial intelligence, he said cooperation is needed to ensure innovation remains people-centred and inclusive, creating opportunities rather than deepening inequalities.

“Growth, not stagnation, empowerment, not subjugation,” he stressed.

Anwar recalled Malaysia’s industrial transformation in Penang in the 1970s, saying Japanese firms played a key role in laying the foundations for its emergence as one of Asia’s leading electronics and semiconductor hubs.

He said the relationship was built not only on investment, but also on confidence, partnership and a shared commitment to long-term development.

“Today, that spirit remains highly relevant, and must continue to ride on the mantra of proactivity over passivity,” he added.

Earlier in his address to a distinguished audience at the forum, he said the international system underpinning decades of growth and development is now under significant strain.

According to Anwar, the multilateral trading system, once the cornerstone of global economic integration, faces mounting pressures from fragmentation, unilateral actions, and strategic competition.

“It appears that (US President Donald) Trump’s failed ‘Liberation Day’ tariffs are being given another new lease on life via new proposed impositions invoked under Section 301 of the Trade Act of 1974,” he said.

He also pointed to a growing trend of export restrictions and industrial policies shaped by geopolitical rivalry, warning that economic interdependence is increasingly being weaponised.

“Supply chains, technology, critical minerals, finance, and market access are increasingly viewed through the lens of rivalry rather than mutual benefit,” he added. — BERNAMA

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KUALA LUMPUR — Sovereign countries should not be timid in defending free trade and opposing punitive tariffs or discriminatory policies, said Prime Minister Datuk Seri Anwar Ibrahim (picture).

Anwar said as a sovereign interdependent country, Malaysia took its position on tariffs very clearly, and has been appealing to countries to be more affirmative and more pronounced in their views on free trade and multilateralism.

“Do we agree that there should be punitive tariffs or discriminatory policies? (No,) we don’t. Do we support free trade? (If yes), then say it as a policy.

“Of course, you know the limits, but you (still) have to say it. Otherwise, you are not contributing to this new thinking,” he said during a question-and-answer session following his keynote address at the Nikkei Forum in Tokyo, Japan today.

The session was broadcast live on television and social media.

Anwar was asked how ASEAN could effectively address protectionist policies by major powers and internal differences among member states, including whether engagement with groups such as BRICS – comprising Brazil, Russia, India, China, and South Africa – form part of a broader strategic diversification.

Anwar said it is of critical importance for ASEAN to continue engaging vibrantly and aggressively with all countries while maintaining its centrality and independent stance.

In Malaysia, he said the country enjoys excellent relations with the United States, its largest trading and investment partner. However, Malaysia disagrees with the unilateral imposition of tariffs.

“Did I say it to President Donald Trump? Of course, although very politely during the (ASEAN Summit) meeting I hosted. We expect the same from other countries, so that we can build consensus.

“Of course, countries will have their own priorities, but it is not a zero-sum game,” he said, adding that it is not true that he is tilting towards any particular country, as perceived by some in the media.

Anwar emphasised that Malaysia’s participation in BRICS does not mean abandoning its strong trade and investment ties with the US.

Malaysia will continue to deepen cooperation with BRICS, as well as the Gulf Cooperation Council (GCC), which he described as a vibrant grouping with significant progress in technology and energy transition. — BERNAMA

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TOKYO — The world is currently facing a shortage of leadership clarity rather than power, Prime Minister Datuk Seri Anwar Ibrahim said today.

Speaking at the Nikkei Forum on “Navigating Strategic Uncertainty”, Anwar urged renewed global cooperation to address mounting geopolitical challenges, stressing that effective leadership requires a clear sense of direction amid global uncertainty.

“The sailors of old could not predict every storm. They could not control the currents, nor could they see beyond every horizon. What they possessed was a clear sense of direction,” he said.

He said the world does not lack power but clarity, with institutions needing reform and renewal rather than abandonment, cooperation preferred over division, and leadership requiring initiative rather than resignation.

“If we remain guided by these principles, I earnestly believe we can transform today’s challenges into tomorrow’s opportunities,” he said.

Anwar’s address was the first item on the agenda of the 31st Nikkei Forum, under the theme “Working Together for a More Resilient and Prosperous Asia”. — BERNAMA

 

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by NURNABIHAH DINI 

MALAYSIA’s fuel subsidy bill surged sharply in recent months amid global energy market volatility, but earlier fiscal reforms have given the government sufficient flexibility to manage the pressure without derailing economic stability.

Second Finance Minister Datuk Seri Amir Hamzah Azizan said subsidy expenditure rose significantly in the first four months of the year, driven by external shocks including global supply disruptions and geopolitical tensions.

He said monthly fuel subsidy spending climbed from about RM700 million in January and February to a peak of RM7.5 billion in April, before easing to an estimated RM3.5 billion to RM4 billion as global oil prices moderated.

Despite the spike, he stressed that Malaysia’s fiscal position remained manageable due to reforms implemented over the past few years.

“The objective is to build a system that is resilient to change and can be adjusted as better data becomes available,” he said at the Invest Malaysia Kuala Lumpur 2026 forum on June 9.

Amir Hamzah said the government had deliberately avoided large-scale stimulus measures, warning that broad injections of liquidity during supply-constrained conditions could worsen inflationary pressures.

Instead, Putrajaya focused on targeted support for households and businesses, including financing facilities, guarantee schemes and micro-credit assistance totalling billions of ringgit through the banking system and development institutions.

“We now have better data and we can adjust the system to fit what we understand the market is,” he said, adding that improved targeting has helped ensure assistance reaches vulnerable groups more efficiently.

He said ministries and agencies have also been instructed to identify savings through tighter expenditure controls, improved procurement practices and operational efficiencies, including adjustments in administrative costs.

“The reforms that were made earlier allowed us to continue supporting businesses while managing the fiscal position of the country,” he said.

Amir Hamzah said these measures demonstrate that fiscal management is now being carried out in a more coordinated and disciplined manner across government.

He added that Malaysia’s ability to maintain relatively stable inflation, despite global cost pressures, reflected the effectiveness of its reform agenda and targeted subsidy approach.

Looking ahead, he said the government would continue to prioritise energy security and fiscal sustainability as global uncertainties persist, while ensuring that growth momentum and household welfare are protected.

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by NURNABIHAH DINI 

MALAYSIA’s largest government-linked investment companies (GLICs) will allocate part of their capital to support companies that demonstrate a strong commitment to value creation and the adoption of “My Value Up” principles. 

Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi (picture) said the move by the Employees Provident Fund (EPF), Permodalan Nasional Bhd (PNB) and Kumpulan Wang Persaraan (KWAP) is aimed at strengthening corporate governance, capital allocation and transparency among listed companies.

“The largest GLICs namely EPF, PNB and KWAP will allocate a portion of their capital to support companies that demonstrate a strong commitment to value creation and the adoption of My Value Up principles,” he said at Invest Malaysia 2026 on June 9.

He said the initiative would ensure companies embracing stronger governance and higher transparency standards are recognised not only by the market but also by the country’s largest institutional investors.

Ahmad Zahid said Malaysia’s next phase of capital market development must be anchored not only in size but also in quality, as investors increasingly seek stronger governance, better capital allocation and clearer corporate strategies.

He described My Value Up as a framework that shifts the market from a culture of compliance towards active value creation, encouraging companies to focus on long-term growth and communicate their strategies more effectively.

He said Malaysia’s capital market has become one of the economy’s key strengths, with its size reaching RM4.3 trillion in 2025 – more than double the nation’s gross domestic product (GDP).

Funds raised through the market rose to RM187.7 billion last year, while 60 initial public offerings (IPOs) were listed. The Islamic capital market also expanded to RM2.7 trillion, reinforcing Malaysia’s position as a global leader in the segment.

He said the capital market must evolve beyond being merely a financing platform and become a national growth engine capable of helping businesses scale and creating national champions.

“We need a capital market that supports companies not only when they are already large, but when they are ready to grow. We need a market that helps promising enterprises move from local strength to regional scale and from regional scale to global exposure,” he said.

Ahmad Zahid also highlighted Malaysia’s economic resilience, noting that the economy grew 5.2% in 2025 and expanded a further 5.4% in the first quarter of this year.

He said the fiscal deficit had narrowed, inflation had moderated and unemployment had fallen to its lowest level in a decade, reflecting policy clarity, economic discipline and political stability.

According to him, Malaysia continues to attract investment into future-focused sectors such as advanced manufacturing, semiconductors, digital infrastructure, renewable energy and high-value services.

“These are sectors that create quality jobs, strengthen domestic capabilities and place Malaysia higher in the regional and global value chain,” he said.

Looking ahead, Ahmad Zahid said Malaysia’s success should not be measured solely by the amount of capital it attracts but by how effectively that capital creates jobs, expands opportunities and improves livelihoods.

He added that a strong capital market must support not only large corporations but also small and medium enterprises (SMEs), Technical and Vocational Education and Training (TVET) students, entrepreneurs, youth and rural communities.

“Malaysia enters this next phase with confidence. Our fundamentals are strong. Our investment momentum is clear. Our capital market is growing,” he said, adding that the country’s next chapter would ultimately be defined by execution and collaboration between government, investors, institutions and industry.

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Future success will depend less on manufacturing scale and more on technological capability, talent quality, supplier sophistication and ecosystem integration 

by ALISSYA ZUNIZAM 

CONVERSATIONS across booths and industry forums at the recent Semicon South-East Asia 2026 (Semicon SEA 2026) focused not only on factory expansion and production capacity, but also how artificial intelligence (AI), advanced packaging, supply-chain shifts and talent development are reshaping the industry and Malaysia’s role within it. 

The discussions showed how semiconductors have become central to industries powering the global economy, from AI and electric vehicles (EVs) to cloud computing and data centres while geopolitical tensions and supply-chain disruptions are forcing governments and companies to reassess where chips are manufactured and how critical technologies are sourced. 

For Malaysia, the changing landscape is creating both opportunities and pressure. 

The country remains a major player in the global semiconductor industry supported by decades of manufacturing experience, established infrastructure and a strong multinational presence. 

However, policymakers and companies acknowledge that Malaysia’s semiconductor ecosystem remains heavily concentrated in back-end activities such as assembly, testing and packaging while higher value front-end work involving wafer fabrication, integrated circuit (IC) design and semiconductor intellectual property development continues to take place elsewhere. 

As global demand accelerates, Malaysia is attempting to strengthen its position beyond manufacturing support functions and expand into more advanced parts of the value chain. 

Strengthening Semiconductor Ecosystem

Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani said the global semiconductor market, valued at around US$630 billion (RM2.5 trillion) in 2024, is projected to exceed US$1 trillion by 2030 and potentially reach US$2 trillion by 2035. 

The growth is being driven largely by AI infrastructure including demand for servers, data centres and advanced computing systems. 

Malaysia remains deeply integrated into the global semiconductor supply chain. 

Electrical and electronics (E&E) exports reached RM711 billion with semiconductors contributing RM465 billion or about 65.4% of the sector. 

The semiconductor industry currently supports around 230,000 jobs locally while the broader E&E ecosystem employs roughly 630,000 workers nationwide. 

Malaysia is also home to around 800 semiconductor-related companies including multinational corporations such as Intel Corp, Advanced Micro Devices Inc (AMD), Micron Technology Inc, Broadcom Inc, Infineon Technologies AG and NXP Semiconductors NV alongside local firms including Inari Amertron Bhd, Pentamaster Corp Bhd, SkyeChip Bhd and Unisem (M) Bhd. 

Despite that scale, Malaysia continues to rely heavily on imported IC and front-end semiconductor activities. 

Johari said semiconductor imports stood at RM308 billion in 2025 while re-exports totalled RM187 billion, highlighting Malaysia’s continued dependence on imported ICs and wafer fabrication capacity. 

The government is trying to address those gaps through the National Semiconductor Strategy (NSS) which focuses on strengthening wafer fabrication, IC design, advanced packaging, and research and development activities. 

The NSS also aims to produce 60,000 high-skilled engineers by 2030 with more than 13,000 already added into the industry pipeline. 

Throughout Semicon SEA 2026, talent development was repeatedly framed as a key factor in determining whether Malaysia can move further into higher-value semiconductor activities over the coming decade. 

The policy challenge is not only to attract larger investments but to ensure that new investments create deeper local participation through suppliers, engineers, research partnerships and higher value manufacturing activities. 

That is why discussions at the event moved beyond headline investment numbers and focused on whether Malaysian companies can become involved in technology development, equipment support, process engineering and design-related work. 

Industry participants said the next stage of growth would require stronger links between public policy, private investment and training institutions so that talent and supplier development can move at the same pace as investment announcements. 

For local companies, the opportunity is also changing in nature. 

Rather than competing only on cost, more suppliers are being pushed to show technical reliability, consistency, certification readiness and the ability to support customers across longer product cycles. 

This is important as semiconductor products become more customised and customers look for partners that can respond quickly to design changes, tighter quality requirements and shorter production timelines. 

The shift also means Malaysia’s established manufacturing base cannot remain static. 

Companies involved in back-end operations are increasingly expected to upgrade processes, invest in automation and develop stronger engineering teams if they want to remain relevant to multinational customers moving into more advanced production. 

At the same time, the government’s push into IC design and wafer-related activities will require a different type of ecosystem from the one that supported Malaysia’s earlier semiconductor growth. 

Design work depends heavily on specialised talent, intellectual property (IP) development, software tools, university research and closer collaboration between engineers and commercial teams. 

Supply-chain Shifts Opening Doors

For decades, Malaysia’s semiconductor industry has been anchored by manufacturing efficiency. 

The country built its reputation as a reliable hub for assembly, testing and packaging operations supported by competitive costs, strong logistics infrastructure and long-standing ties with multinational semiconductor companies. 

That foundation helped position Malaysia as an important player within the global semiconductor ecosystem. 

However, the industry is entering a new phase driven by AI, advanced packaging technologies, specialised semiconductor equipment and increasingly complex chip architectures. 

Deputy Investment, Trade and Industry Minister Sim Tze Tzin said semiconductor supply chains can no longer be evaluated solely on manufacturing costs. 

Instead, countries are increasingly being measured based on resilience, supplier depth, ecosystem integration and long-term technological capabilities. 

Malaysia currently accounts for about 13% of global assembly, testing and packaging but future competitiveness will depend on how deeply local companies are embedded across Tier 1, Tier 2 and Tier 3 semiconductor supply chains. 

“The difference is between being a place where chips are made and being a place that the world’s chip makers cannot do without,” he said at the event. 

Sim also pointed to recent disruptions involving materials used in printed circuit board (PCB) manufacturing as an example of how external developments can quickly ripple across global semiconductor production. 

He said localisation and stronger supplier integration will become increasingly critical as supply chains continue evolving. 

That shift was evident among exhibitors at Semicon SEA 2026 where several companies said customers are increasingly seeking suppliers outside China and Taiwan amid ongoing trade tensions and supply-chain diversification efforts. 

For Malaysian firms, the changing landscape is creating fresh opportunities to strengthen their role within regional semiconductor ecosystems. 

Penang-based GUH Circuit Industry (PG) Sdn Bhd said it has seen rising interest from customers looking for non-China and non-Taiwan manufacturing partners. 

The company manufactures rigid PCBs used across industries including 5G, automotive, and medical devices. 

Established in 1987, it initially focused on single-sided boards mainly for audio products before gradually expanding into multilayer and high-density interconnect (HDI) boards. 

Senior executive for business development Tan Wei Ling said the company has accelerated investments in machinery and manufacturing capabilities since 2022 as semiconductor products become smaller, thinner and more technically demanding. 

The company currently produces up to 16-layer boards and is preparing to expand into 20-layer boards while also exploring plans for a second manufacturing facility. 

“Nowadays in the market, when customers are looking for non-China and non-Taiwan manufacturers, we are proud to say that we are wholly Malaysian-owned,” she told The Malaysian Reserve (TMR). 

Tan said participation in Semicon SEA 2026 was also aimed at strengthening the company’s visibility within the regional semiconductor ecosystem. 

Like many Malaysian semiconductor firms, GUH Circuit Industry has traditionally relied on long-term customer relationships and referrals rather than active participation in trade exhibitions. 

However, changing market conditions are encouraging more local companies to strengthen branding efforts and build broader regional networks. 

Talent Shortages as Major Concern

One of the most frequently discussed issues during Semicon SEA 2026 was the shortage of specialised semiconductor talent. 

While Malaysia has developed strong capabilities in manufacturing and testing operations, companies said there remains a shortage of engineers with expertise in areas such as IC design, advanced packaging and semiconductor systems development. 

Melexis (M) Sdn Bhd senior development engineering project manager Dr Savita Veerapandian said the issue has become more visible as companies expand into more advanced semiconductor applications. 

The Belgian semiconductor company operates facilities in Kuching, Sarawak, involving IC design, wafer probing and final testing operations. 

Its products are used mainly within automotive applications although the company is also expanding into robotics, industrial systems, digital healthcare and data centre-related technologies. 

Savita said Malaysia’s education and training ecosystem still requires stronger alignment with industry requirements for advanced semiconductor work. 

“Malaysia has a very strong background in manufacturing but for IC design, we see that it is not up to the level yet. 

“That is something Malaysia should work on, to nurture the talent and provide the right training and education,” she told TMR. 

She said many engineering graduates enter the workforce with broad-based E&E qualifications but semiconductor design work often requires much more specialised technical exposure. 

According to her, in Europe, semiconductor engineers often undergo more focused post-graduate training before entering the industry. 

Savita stressed that the issue is not necessarily about the capability of Malaysian students but whether the industry ecosystem currently provides sufficient pathways for advanced semiconductor training. 

She said companies such as Melexis are increasingly working with universities and training centres to help bridge knowledge gaps and expose students to specialised semiconductor fields earlier. 

The talent challenge is also becoming increasingly global. 

As countries such as Singapore, Taiwan and China continue expanding semiconductor investments, demand for engineers and technical specialists has intensified sharply. 

Advanced Semiconductor Academy Sdn Bhd (ASEM) which was established in 2024 under Selangor Information Technology and Digital Economy Corp (Sidec) is among the organisations attempting to strengthen Malaysia’s semiconductor talent pipeline. 

ASEM representative Tawfiqur Rahman said the academy focuses on final-year students and fresh graduates from E&E, IT and computer science backgrounds. 

The academy offers semiconductor-related programmes involving IC design, embedded systems and AI robotics through a combination of classroom learning and industry placements. 

Participants receive a monthly allowance of RM2,500 over four months through funding provided by Khazanah Nasional Bhd. 

However, graduates are also required to work in Malaysia for at least two years after completing the programme. 

Tawfiqur said the bond was introduced partly because competition for semiconductor talent has become increasingly aggressive. “Demand for semiconductor talent is currently strong especially in China, Taiwan and Singapore,” he said.

He added that Malaysia’s semiconductor ambitions would depend not only on producing more graduates but also on ensuring the country can retain skilled talent over the longer term. 

A shortage of specialised engineers could become one of the biggest constraints on Malaysia’s semiconductor expansion plans if not addressed early. 

AI, advanced manufacturing and semiconductor design activities increasingly require multidisciplinary skill sets involving software, electronics, automation and data systems. 

 

AI Reshapes Manufacturing Environment

As manufacturers increasingly integrated digital systems into production environments, AI and automation were among the dominant themes throughout Semicon SEA 2026. 

One of the main attractions during the event was the Intelligent Manufacturing Showcase organised by SEMI and Sandisk Storage Pte Ltd. 

The showcase demonstrated how AI-enabled systems, automation and digitalisation are being applied within semiconductor manufacturing operations. 

Applications included predictive maintenance, automated workflows, real-time monitoring, and AI-assisted manufacturing systems designed to improve operational efficiency and production responsiveness. 

The showcase also highlighted how semiconductor manufacturers are increasingly using AI to support human decision-making rather than replace workers entirely. 

SEMI president and CEO Ajit Manocha said the semiconductor industry is entering a phase where collaboration across companies and 

markets is becoming increasingly important. Meanwhile, Sandisk senior director for automation development engineering Peng Koon Hew said manufacturing performance increasingly depends on how effectively companies combine AI systems with human expertise.

The rapid expansion of AI-related infrastructure is also creating strong demand growth across the semiconductor sector. 

Micron Memory Malaysia corporate VP Amarjit Sandhu said AI is driving significant demand for memory and storage products used in data centres and advanced computing systems. 

Micron currently operates facilities in Penang and Muar, Johor, and works with more than 700 local suppliers in Malaysia, spending close to RM2 billion annually on local procurement to strengthen supply-chain resilience and operational efficiency. 

Several advanced products supporting AI-related infrastructure are already being produced locally as the company expands its role in higher-value semiconductor manufacturing activities. 

Micron is also placing greater emphasis on local supplier development as part of broader efforts to improve manufacturing agility and reduce supply-chain risks. 

The growth of AI is not only increasing semiconductor demand but also reshaping how semiconductor factories operate with production systems becoming more automated, data-driven and increasingly reliant on real-time analytics. 

As a result, future semiconductor workers are expected to require stronger capabilities involving AI systems, digital manufacturing and automation technologies. 

As semiconductor manufacturing becomes more advanced, companies are increasingly shifting towards highly specialised production processes involving precision equipment, automation and digital systems. 

The transition is also changing workforce requirements with greater demand for engineers and technical specialists supporting semiconductor equipment, installation, maintenance and advanced manufacturing operations. 

Nikon Precision Malaysia Sdn Bhd is among companies expanding engineering hiring as operations grow locally and regionally. 

Established in Malaysia in 2023, the company specialises in semiconductor lithography systems used in wafer patterning processes. 

Field service engineer Mohd Amier Irfan Arzuang said the systems transfer circuit patterns onto semiconductor wafers through laser exposure technology. 

Nikon is currently expanding operations in Penang and Kuching, Sarawak, while increasing hiring for installation, maintenance and troubleshooting functions. 

The growing importance of semiconductor equipment manufacturing and servicing also reflects broader industry investments into more advanced chip production technologies. 

Advanced Manufacturing Capabilities Gain Importance 

Semiconductor equipment manufacturing also emerged as a growing area of focus during Semicon SEA 2026. 

Companies said Malaysia’s long history within semiconductor manufacturing has already helped build a relatively mature supplier ecosystem compared to many other regional markets. 

However, more advanced semiconductor manufacturing activities increasingly require specialised capabilities involving contamination control, vacuum systems, precision engineering and advanced clean manufacturing processes. 

Semiconductor equipment maker Besi APac Sdn Bhd said Malaysia has become its main high-tech manufacturing hub outside China. 

Besi APac senior VP in global operations and MD Henk-Jan Jonge Poerink said the company has progressively shifted manufacturing operations from Europe into Malaysia over the past decade. 

Some advanced semiconductor bonding systems are now assembled locally using up to 80% Malaysian supply-chain content. 

Henk said Malaysia already possesses strong engineering and supplier foundations because of decades of semiconductor manufacturing experience. 

However, he said the country still needs to continue strengthening technical capabilities in several advanced manufacturing areas. 

The company currently works with hundreds of local suppliers through its outsourcing model. 

Henk said semiconductor supply chains increasingly require suppliers capable of supporting module-level manufacturing rather than only supplying individual components. 

That shift is encouraging Malaysian firms to strengthen manufacturing integration, engineering expertise and technical capabilities. 

Global Chip Race Raising Pressure

Malaysia’s semiconductor sector is entering a more competitive phase as countries worldwide accelerate efforts to strengthen their positions within global semiconductor supply chains. 

While Malaysia already has decades of experience in semiconductor manufacturing, future industry growth is increasingly shifting towards higher-value activities. 

The next phase of development will likely depend heavily on how quickly Malaysia can strengthen technical expertise, expand supplier capabilities and produce more specialised engineering talent. 

Stronger collaboration between multinational corporations (MNCs), local suppliers, universities and government agencies is also becoming increasingly important as semiconductor ecosystems grow more complex and technology-driven. 

Malaysia already possesses many of the foundations needed to expand further within the semiconductor value chain supported by its established manufacturing base, supply-chain networks and long-standing industry presence. 

However, global competition is also intensifying as countries continue investing aggressively to attract semiconductor investments, strengthen domestic capabilities and secure larger roles within critical supply chains. 

For many companies participating at Semicon SEA 2026, the issue is no longer whether semiconductor demand will continue expanding but whether Malaysia can strengthen enough parts of its ecosystem to capture more value from the next phase of global semiconductor growth. 

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• This article first appeared in The Malaysian Reserve weekly print edition

The post Semicon SEA 2026 showcasing shift towards higher value semiconductor growth appeared first on The Malaysian Reserve.