Taiwanese businesses expand Malaysia operations amid supply chain shifts

Penang, Malaysia, Feb. 23 (CNA) Taiwanese companies are increasing their investment in Malaysia, taking advantage of its strategic location, skilled workforce and role as a global supply chain hub.

As geopolitical tensions and supply chain restructuring shape business strategies, industries including semiconductors are establishing or expanding their presence in the country.

Taiwanese firms boost presence in Malaysia

Taiwan's ASE Technology Holding Co., a global leader in semiconductor packaging and testing, is one of many companies deepening its footprint in Malaysia.

The firm, which currently employs 3,300 workers in the country, expects that number to double in the coming years, according to ASE Southeast Asia President Lee Kwai Mun (李貴文).

Lee said that Penang has been aggressively promoting the semiconductor industry for decades, and now hosts over 350 multinational enterprises and more than 4,000 small and medium-sized businesses.

He noted that the sector accounts for 5 percent of global semiconductor revenue and 45 percent of Penang's GDP.

Beyond semiconductors, Taiwanese companies in sectors such as electronics, smart logistics, servers, and cloud computing are also expanding their operations.

Geopolitical shifts drive investment

The U.S.-China trade conflict and efforts to diversify supply chains have made Malaysia an attractive base for Taiwanese businesses. With its proximity to major markets like China, Singapore and India, the country serves as a strategic location for companies looking to maintain flexibility in production and distribution.

Malaysia has become an important base for Chinese companies relocating overseas, said Alex Tan, an engineer at the Southeast Asia branch of Taipei-based WinWay Technology Co., which set up a business and technical service center in Penang in May 2023.

Taiwanese investment in Malaysia has grown steadily over the past few decades. From the 1980s to September 2024, Taiwanese businesses invested a total of US$15.2 billion in the country, with 1,700 Taiwanese firms currently operating there.

Of these, 600 companies are based in Penang, with a combined investment of US$2.7 billion, according to Phoebe Yeh (葉非比), Taiwan's representative to Malaysia.

Why Malaysia?

Industry experts say several factors have contributed to Malaysia's rise as a preferred destination for Taiwanese businesses, including the supply chain ecosystem, multilingual workforce and stable regulatory environment.