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Industry Overview: Malaysia Electrical & Electronics (E&E) Industry

The Electrical & Electronics (E&E) is a leading and most liberalized industry in Malaysia's manufacturing sector. The strong E&E industry in Malaysia is the result of the Government's initiatives to promote labor intensive and export-oriented industries. Since the establishment of the first semiconductor plant in Penang in 1972, Malaysia has become a major global manufacturing hub for the E&E Industry, as a large number of multinational companies (MNCs) from USA, Japan, Europe, Taiwan and Korea have chosen Malaysia as their manufacturing base. The E&E sector has grown into Malaysia's largest contributor to output, employment, investments and exports.

In 2010, the E&E industry was the leading sector in Malaysia's manufacturing sector, contributing significantly to the country's manufacturing output (31%), exports (48.7%) and employment (33.7%). The gross output in 2010 of the industry totaled RM166.2 billion or US$55.8 billion, exports amounted US$83.8 billion and the industry created employment opportunities for 336,408 people.
 
The presence of leading electronic manufacturing services (EMS) companies such as Flectronics, Solectron, Celestica, Jabil, Plexus and Sanmina-SCI provides opportunities for local companies to be part of their supply chain for the equipment, materials, parts and components, and dedicated services such as contract design, burn-in testing, failure analysis and rapid prototyping. Presently, there are more than 50 companies operating as contract manufacturing services (CMS) or EMS companies.
 
Malaysia's success can be attributed to a winning combination of pull factors: a stable government, good economic policies, topnotch infrastructure and a skilled knowledge workforce. As a result, Malaysia has developed significant expertise for the manufacture of a wide range of semiconductor devices, high-end consumer electronic and information and communication technology products. Based on the Malaysian Industry Development Authority's (MIDA) records, from a total of just four companies with 577 employees and a total output value of RM25 million in 1970, today the E&E industry has expanded to more than 1,695 companies with total investment of RM108 billion and a workforce of more than 600,000 people.
 
Siemens, Bosch and Infineon are just some of the well-known companies, who have moved their production to Malaysia. Based on a statement by 'The German Electrical and Electronic Manufacturers Association' (ZVEI), Asia will stay the growth region of the future, with China leading the pack. Smaller nations like Malaysia will get their fair share of this development if they continue to offer economic and political stability.
 
With a sterling track record of nearly four decades, the future of the E&E industry in Malaysia looks sparkling. Industry players involved in both the front-end and back-end of the semiconductor supply chain informed encouraging demand trend. Flash memory applications such as secure digital cards, USB flash drives and MP3 players will continue to be the drivers of growth. The country has the intellectual and physical resources to provide for its continuity, evidenced by the ever increasing pool of MNCs who have shifted their key products, processes and other manufacturing related activities from their home bases to Malaysia, as well as the many success stories of local companies. 
 
(Source: Insight Alpha)
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The German Electrical and Electronic Manufacturers Association' (ZVEI)