Malaysia AI Memory Chips Market Size and Forecast by Type, Node Type, End User Application, and Distribution Channel: 2019-2033

Malaysia AI Memory Chips Market Outlook

Malaysia AI memory chips market is accelerating into a high-growth trajectory, fueled by decisive policy moves, robust foreign investment, and shifting geopolitical dynamics. With the country already contributing 13% to the global semiconductor packaging and testing industry, Malaysia is strategically leveraging its midstream strengths to climb the semiconductor value chain. As per David Gomes, the market is expected to reach substantial double-digit billion-dollar figures in the next five years, driven by increasing demand for AI-centric workloads, enhanced local R&D infrastructure, and targeted government backing through the National Semiconductor Strategy (NSS).

At the heart of this transformation is Malaysia’s upcoming incentive package set for release in July 2025. While specific terms remain under wraps, Trade Minister Tengku Zafrul Aziz has emphasized the government’s firm commitment to enabling chipmakers across design, fabrication, and packaging domains. These incentives are poised to turbocharge projects already backed by multibillion-dollar investments from global heavyweights like Intel and Infineon. The NSS aims to establish at least 10 Malaysian companies in advanced packaging and integrated circuit (IC) design, each projected to generate RM1 billion to RM4.7 billion in revenue, fostering both local innovation and global relevance.

Further bolstering Malaysia’s prospects is the country’s geostrategic agility in managing U.S.-China semiconductor tensions. Recent events surrounding the proposed deployment of Huawei’s Ascend GPU-powered AI servers illustrate Malaysia’s delicate balancing act. After Deputy Minister Teo Nie Ching’s announcement on the rollout of 3,000 Huawei AI servers by 2026, the government retracted the claim amid U.S. scrutiny, citing the project as a privately initiated effort. This retraction underscores the geopolitical minefield surrounding AI chip supply chains and export compliance, particularly as U.S. authorities tighten export controls on AI hardware such as Nvidia’s H100 chips. Malaysia’s ability to comply while maintaining trade and innovation flexibility reflects growing institutional maturity.

At the same time, Malaysia’s government is actively working to draw global players into upstream semiconductor activities. Strategic partnerships with companies such as ARM Holdings Plc are designed to fast-track local access to critical semiconductor IP, tools, and licensing frameworks needed for AI-specific workloads. The overarching ambition is clear: to transform Malaysia from a traditional OSAT (outsourced semiconductor assembly and testing) center into a leading hub for high-performance AI chip design and manufacturing. To enable this leap, the NSS includes a three-phase roadmap: building foundational capabilities, advancing to the tech frontier, and leading frontier innovation. A critical component involves training 60,000 engineers to meet the specialized demands of AI semiconductor manufacturing.

Investments in Malaysia’s AI memory chip segment are further supported by surging demand from regional data centers and cloud infrastructure. As hyperscalers seek power-efficient chips to support generative AI and machine learning applications, Malaysia’s affordable energy mix and cooling-friendly environment offer natural advantages. For instance, the expansion of data centers in Cyberjaya and Johor is driving demand for AI-optimized DRAM and HBM (High Bandwidth Memory), key components in training large language models (LLMs). This reinforces Malaysia’s emerging role as a data and compute hub in ASEAN.

However, growth is not without challenges. David Gomes, Manager – IT, notes that while Malaysia has laid the groundwork for AI chip production, significant investment gaps remain in upstream fabs and EDA (electronic design automation) tooling. Fiscal support amounting to RM25 billion has been earmarked, but industry analysts argue that clarity in disbursement mechanisms and faster approval cycles will be essential to attract second-wave investors. Additionally, continued coordination with global regulatory frameworks — such as U.S. export control laws and the EU Chips Act — is vital to maintaining trust and transparency with multilateral stakeholders.

On the international stage, Malaysia’s NSS has drawn attention for its attempt to leapfrog peers like Vietnam and Indonesia, who are also courting semiconductor investment. With 17 free trade agreements (FTAs) ratified, Malaysia holds a competitive edge in offering tariff-free access to key export markets. Moreover, the country’s semiconductor policy is notably more structured and milestone-driven than its regional competitors, indicating a higher likelihood of achieving its 2030 targets.

Executives from Infineon and Intel have praised Malaysia’s long-term policy visibility and skilled workforce. In a recent executive roundtable, Intel’s APAC VP highlighted Malaysia’s operational resilience and its "critical role in supporting next-gen AI compute workloads." Such endorsements reflect the confidence global players have in Malaysia’s ability to become a central node in AI chip supply chains.

As AI transforms industries from healthcare to finance, the underlying demand for memory chips with AI processing capabilities — such as LPDDR5, HBM3, and GDDR6 — is rising exponentially. Malaysia’s push to domestically produce and package these high-value memory components could position the country as a preferred partner for AI hardware supply in a multipolar world. This ambition aligns with broader national goals to become a digital economy powerhouse and a Southeast Asian leader in next-generation technology exports.

Author: David Gomes (Manager – IT)

*Research Methodology: This report is based on DataCube’s proprietary 3-stage forecasting model, combining primary research, secondary data triangulation, and expert validation. [Learn more]

Malaysia AI Memory Chips Market Scope