Malaysia is pushing up the semiconductor value chain from back-end assembly into chip design, and Siemens sees it as Southeast Asia’s frontrunner, but still a step behind India and China.Two senior Siemens executives sketched where the region actually sits, and why export controls have split the industry into two parallel supply chains rather than one.
Malaysia’s retreat up the semiconductor value chain is the country’s defining industrial bet, and the executives selling the software that underpins chip design have a clear-eyed, and not entirely flattering, view of how far it has come. Siemens counts Malaysia as one of Southeast Asia’s frontrunners. It also places the country well behind the parts of Asia that have already made the leap it is attempting.
Speaking at Realize LIVE Asia-Pacific in Bengaluru, Bas Kuper, senior vice president and managing director for Asia Pacific at Siemens Digital Industries Software, put Malaysia’s position plainly. The country is, in his words, “recognised as number two in the world for semiconductor manufacturing”, a status built almost entirely on the back end. For more than fifty years Malaysia has specialised in assembly and test, the final, lower-value stages of making a chip. The ambition now is to move upstream into design.
What the value chain looks like from a vendor’s seat
Bas Kuper, senior vice president and managing director for Asia Pacific at Siemens Digital Industries Software. Credit: LinkedIn
Kuper’s map of Asia is a useful corrective to the optimism that surrounds Malaysia’s push. China, he noted, “moved to design already a long time ago” and is far ahead. Japan is a mature market anchored by large automotive, electronics and semiconductor firms. India has become a design powerhouse, not in manufacturing, but in the engineering work that sits above it.
“Most of the larger enterprises, they have design technical centres here in India,” Kuper said, pointing to the audience at the event. “The majority of their simulation people, design people, are actually in India doing the work for the globe.”
Against that backdrop, Southeast Asia is still mostly a manufacturing story. “Eventually they will move up the supply chain as well,” Kuper said of the region, before singling Malaysia out as one of the frontrunners doing so, ahead of Vietnam and Thailand, which remain weighted toward manufacturing. It is encouragement, but of a measured kind: Malaysia leads a pack that is itself behind.
The underlying figures bear out both the strength and the distance. Malaysia is the world’s sixth-largest exporter of semiconductors and handles roughly 13% of global chip testing and packaging, with 2024 semiconductor exports of about US$130 billion. Its National Semiconductor Strategy, launched at SEMICON SEA 2024 and backed by RM25 billion (US$5.3 billion), sets out a three-phase climb: shore up the back-end strength first, move into integrated circuit design and advanced packaging next, and reach front-end wafer fabrication last.
The country aims to double its roughly 7% share of the global market by the end of the decade.
Selling into the transition
For Siemens, Malaysia’s ambition is also a commercial opening, and the company is approaching it from a position it has quietly held for years. Its Camstar manufacturing execution software, the shop-floor systems that run and track production, has been installed in Southeast Asian fabs for a long time, giving Siemens a foothold on the manufacturing side before design ever entered the conversation.
That base is what Kuper says Siemens is now building on as chip companies look to move up. The company has developed what it calls semiconductor lifecycle management, a template built on its Teamcenter platform to support the product lifecycle side of semiconductor firms, the systems that track a chip from design through production.
“We’re building on these relationships that we have on the EDA side, on the manufacturing side, now moving into design and lifecycle management,” Kuper said, citing wins with Samsung’s semiconductor arm and Japan’s Rapidus.
The bottleneck to adoption, in his account, is not the one the region tends to name. Talent is abundant, “we sort of have a luxury problem here,” he said of Asia’s deep pool of engineers. The harder constraint is organisational. “It’s the change management or the organisational transformation that the companies have to go through,” Kuper said.
“It’s not a technology question. It is more on how do I get my people to think differently?” He noted that one customer had a strike the week before over a plan to pilot humanoid robots, a reminder that the friction in moving up the value chain is often human rather than technical.
Two supply chains, not one
Ankur Gupta, executive vice president of EDA IC software at Siemens Digital Industries Software. Credit: LinkedIn
If Malaysia’s climb is the regional story, the global backdrop is the fracturing of the semiconductor industry along geopolitical lines, and here Ankur Gupta, executive vice president of EDA IC software at Siemens, offered the sharper read. Asked whether last year’s brief US export restrictions on chip design tools for China had changed how customers in the region think about sourcing, Gupta described a market settling into two parallel structures rather than fragmenting into many.
“China is definitely building its own completely domestically owned full stack,” he said. “And it’s not just EDA tools. They’re looking at manufacturing, everything.” The motive, as he framed it, is resilience: China is constructing a self-contained ecosystem so it cannot be cut off. The rest of Asia is not splintering in response. “You very clearly see Japan, US, these are the allied nations. You see Europe, Japan, US, Taiwan, Korea, all working together,” Gupta said. “India is a huge design centre. It’s not at all there in manufacturing, but India has a desire to get into OSAT.” His conclusion was blunt: “China has a supply chain, and the rest of the allied nations have a second supply chain.”
It is a calmer reading than the decoupling anxiety that colours much of the coverage, and a consequential one for Malaysia. A country that has staked its upgrade on being a neutral, non-aligned node in the global supply chain is, on Gupta’s account, operating in a world that is consolidating into two blocs rather than dispersing risk across many. Where Malaysia lands in that structure, and how much design work the allied bloc routes through it rather than through an already-dominant India, is the question its strategy has yet to answer.
For now, Siemens’ executives offer Malaysia a qualified endorsement: a genuine frontrunner in Southeast Asia, moving in the right direction, on a longer road than the ambition sometimes admits, and into an industry that has quietly sorted itself into two.
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