Malaysia stands to gain a larger share of the global semiconductor market by expanding its role in advanced packaging, a critical segment for artificial intelligence (AI) chips, according to analysts from Nomura Asset Management. While the country already has a strong presence in semiconductor assembly and testing, its involvement in advanced packaging remains limited despite several strategic advantages.

Nomura Asset Management UK Ltd equity research executive director Takeshi Kawamoto highlighted Malaysia's status as a stable and geopolitically neutral player in the technology supply chain, comparing it to Switzerland due to its balanced relationships with both the United States and China. “Malaysia’s back-end sector is strong,” Kawamoto said, citing the presence of major companies like Infineon Technologies and Intel Corp in the country. He emphasized the importance of Malaysia moving deeper into advanced packaging to capitalize on the ongoing semiconductor boom.

Malaysia’s electrical and electronics exports have shown double-digit growth year-on-year, fueled in part by increased global demand for AI infrastructure. Advanced packaging has grown in significance as chipmakers seek to integrate multiple high-performance components into complex systems designed specifically for AI computing. The segment, however, is challenging to enter due to its technical complexity and capital intensity.

Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest chip contractor, has traditionally handled much of its advanced packaging work internally. Yet, rising capacity constraints are prompting the company to outsource some activities, presenting an opening for countries like Malaysia to participate in this space. Kawamoto noted, “They’re slowly outsourcing it now because they are very overbooked at the moment. So, they’ve had to spread the wealth.”

In addition to its skilled workforce and geopolitical neutrality, Malaysia benefits from available industrial land suitable for large-scale semiconductor manufacturing facilities—a key factor as industry leaders worldwide, including those in Taiwan, continue investing heavily to expand production capacity.

Kawamoto acknowledged the difficulty in predicting how quickly Malaysia could close the gap with established semiconductor hubs but pointed to the rapid growth of AI over the next three years as a window of opportunity. “We foresee AI growing rapidly in the next three years, so there is still a lot of room to catch up should Malaysia grow bigger in the advanced packaging space,” he said.

Globally, Nomura remains optimistic about the semiconductor sector, driven by sustained AI infrastructure expenditures. Kawamoto noted that AI demand is diversifying beyond the training of large models to include inference and enterprise applications, potentially broadening the semiconductor market’s base. However, he cautioned that geopolitical tensions and potential interest rate hikes could create volatility in semiconductor equities, affecting investment values.

Separately, Nomura Asset Management Malaysia managing director Leslie Yap reported steady asset growth for the Nomura Global Syariah Semiconductor Equity Fund, which held RM1.2 billion in assets as of July 31, 2026. However, Yap indicated there are no immediate plans to launch a semiconductor-focused fund exclusively dedicated to Malaysian companies, citing the current size of the country's semiconductor industry as a limiting factor.