Employers have pointed out gap between academic training and industry needs in Malaysia.

Malaysia is rushing to foster engineering talent to meet the country’s ambition to become a major player in the global semiconductor industry.

Long a manufacturing hub in Asia, Malaysia is now expanding its chip sector, especially into frontend processes such as integrated circuit design. But businesses have continued to feel the pinch of a talent shortage, with students showing less interest in science, technology, engineering, and mathematics (STEM) fields, and a growing disconnect between academic training and industry needs, experts say.

“Recruiting engineers for specific projects is easier elsewhere. For example, in India, we can contract engineers for projects quickly. In Malaysia, it’s much harder to find the right talent,” Kalai Selvan Subramaniam, managing director of Infinecs, a leading electronics design services company in Penang, told Nikkei Asia.

“To grow, Malaysia must either meet global competency levels or bring in the best talent from around the world,” he added.

Malaysia’s electrical and electronics sector employs about 600,000 workers, according to the country’s Statistics Department and the Khazanah Research Institute. In a 2022 survey of local businesses by the Malaysia Semiconductor Industry Association, 47% of respondents said the availability of talent is a limiting factor to doing business in Malaysia.

Recognizing the issue, and with more technology investment flowing in due to global supply chain shifts, the Malaysian government has revealed a plan to train 60,000 high-skilled engineers by 2030. The government also seeks to double STEM enrollment, encourage female participation in STEM fields, and enhance technical and vocational training.

Leading the talent development drive is Collaborative Research in Engineering, Science, and Technology (CREST), an industry-led initiative launched in 2012 to foster collaboration between academic institutions, government agencies, and private companies.

The project supports local startups through incubator and accelerator programs, offering young entrepreneurs resources, mentorship, and funding opportunities. CREST has also engaged with industries to develop new products in areas like LED and solid-state lightning, making Malaysia a key global manufacturing base.

“When we say collaborative R&D, we mean applied research. Traditional universities often focus on primary research without consulting industries, which is problematic because much of the R&D budget goes toward research, with little to show for it,” CREST’s CEO Jaffri Ibrahim told Nikkei Asia. He believes CREST’s initiatives have built an ecosystem that encourages local innovation and integrates startups into the global value chain.

In line with national efforts, the state of Penang in northern Malaysia implemented a STEM talent blueprint in September 2024. The initiative introduces STEM concepts early, engaging primary through secondary school students with hands-on programs designed to spark interest in science and technology. By addressing the talent pipeline early, Penang hopes to ensure a steady supply of skilled professionals for its semiconductor industry.

David Lacey, a prominent figure in Penang’s LED industry, emphasized the importance of aligning R&D infrastructure with industry needs.

“While Malaysian companies have a strong position in packaging, they need to adopt new technologies, source equipment locally and understand processes for advanced packaging. R&D must also be conducted locally, with universities and research institutes supporting the transition to advanced packaging,” Lacey told Nikkei Asia.

Meanwhile, Shahidan Abdullah, director of MIMOS Academy, a training organization under the Ministry of Science, Technology and Innovation, said rapid technological advances have left educational institutions struggling to keep up with changing industry needs.

“There is a need for constantly reviewed curricula in universities and greater industry collaboration to bridge skill gaps,” he said.

According to the World Bank, an increasing number of Malaysian degree holders are employed in fields unrelated to their qualifications. The bank’s Malaysia Economic Monitor report found that over a quarter of graduates face hurdles in securing high-skilled employment, reflecting the struggles of educational institutions to keep pace with technological change. This has resulted in a shortage of specialized talent crucial for Malaysia’s growing semiconductor sector.

Malaysia’s goal of having 60% of students enrolled in STEM fields remains unmet, with the share consistently below 50% since 2000.

The broader national decline in STEM interest stems from perceptions of these fields as overly challenging and offering less competitive starting salaries. The rise of the gig economy exacerbates the problem, drawing young talent toward lucrative short-term opportunities rather than long-term STEM careers.

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