A case for the E&E sector in

Malaysia

2

The Evolution of E&E in Malaysia

Simple components, semiconductor parts assembly and SKD electrical products

Consumer electronics parts to full assembly

Office & computer equipment (inc. hard disk drive and hard disks)

Higher value-added products/activities - R&D- IC & System Design - Wafer fab, - Ingot growing- Low volume, high complexity and high

mixed products (e.g: instrument, medical, aerospace),

- Digital consumer goods (e.g blu-ray player, HDTV-LED flatscreen, e-book)

2010

1990

1980

1970

Started in 1970’s with 7 companies

Consumer : Clarion and Bosch

Components : AMD, HP, Intel, Litronix and National Semiconductor

Future Fablite Fabless Miniaturization Flexible electronics Electric Vehicle (EV) Laser Video Display SMART Electronics Internet of Things

• Labour Intensive• Low Technology

Products• Low value added

• Capital Intensive • Knowledge Based• Hi-Tech• High Value Added

Source: MIDA

3

Since then and today

700

E&E Companies in Penang

200 MNCs

directly in E&E

50% Penang

workforce directly or indirectly in E&E

E&E contributes

33% of Malaysia’s

export

4

E&E is still very important

Source: MATRADE

5

80% of Malaysiansearns < RM3k

a month

Despite all these…

Local companies not moving up the

value-chain

Malaysia’s value proposition for new/existing investments

Lack of R&Dbreakthrough

Gaps betweenIP creation &

commercialization

R&D $ ≠ ROI University measurement ≠ commercialization

Depletion ofScience

graduates Shortage of STEM for Industry

6

Challenges faced by E&E in D&D

The core challenges which we have to address to achieve High Income nation status

Challenges MNCs Large Local Companies SMEs

Funding (Grant) OKLimited (Mainly own

funding)Difficult

Human Capital (Good Quality Fresh Graduates - GPA 3.5 and above)

OK Difficult Difficult

Human Capital (Experienced) Difficult Difficult DifficultCollaborations (Academia) Limited Limited Very Limited

Technology Acquisition N/A Limited Very LimitedGlobal Competition High High High

Competency of Vendors / Suppliers / Partners

Low Average N/A

Source: Special Innovation Unit, PM's Office

7

What others are doing

Other Research and Collaboration Institutes

Formation (Year)

Research Areas of research

Annual research

budget (USD million)

R&D Professionals

Funding

Fraunhofer, Germany 1949 Yes

ICT, Health and Nutrition, Safety and Security,

Transportation and Mobility, Energy and Living,

Environmentally Friendly production

2180

# 22093 employees

with majority in research

70% public financed, 30% government

Industri Technology Research Institute (ITRI) Taiwan

1973 Yes

ICT, Electronics, Optoelectronics, Material and Nanotechnology, Green Energy

and Environmental Technology, Medical Devices,

Mechanical and Systems Technologies

621 (Year 2012)

# 5756

About 50% from

government, the other 50% from contracts

VTT, Finland 1942 YesBiotechnology, Electronics,

Energy, ICT, Microtechnologies

430 # 3000 na

Electronics and Telecommunications Research Institute (ETRI), Korea

Republic1976 Yes

ICT, Components and Materials Research,

Broadcasting and Telecommunications

515 (Year 2011)

# 1737 na

IMEC, Belgium 1984 Yes Nanoelectronics 437 # 2051

78% from contract

research, 21% from grants

A*Star, Singapore 1991 YesBiomedical Science, Physical

Sciences and EngineeringNA NA

Callaghan Innovation (formerly Crown)2013

(restructured)Yes

IT, Environmental technology, Biotechnology

330 NA na

8

Where are we for the local companies?

Most of the locally owned

companies were

incorporated during the 80s

and 90s – hence what happened to

Malaysia’s E&E in the 21st century?

(In RM Millions)Market Cap (as at 16 Oct

2013)

Formation (Year)

State

JCY International 1,278.40 1994 Johor

Globetronics Technology Bhd 864.92 1991 Penang

Unisem M Berhad 600.06 1989 Perak

Uchi Technologies Bhd* 534.69 1981 Penang

Malaysian Pacific Industries Bhd 566.86 1962 Perak

Inari Amertron Bhd 560.08 2006 Penang

Iris Corp Bhd 386.22 1994 KL

PIE Industrial Bhd* 306.88 1997 Penang

GUH Holdings Bhd 273.16 1961 Penang

V.S Industry Berhad 250.06 1979 Johor

Notion VTEC 205.36 1995 Selangor

Vitrox Corp 189.21 2000 Penang

Note: * Foreign Controlled

About CREST

10

With that, 10 Industry Founding Members

UNIQUENESS: INDUSTRY LED

11

And: Supporting Government Org. and Inst.

12

Board of Directors

Deputy Chairman Dato’ Redza RafiqChief Executive OfficerNorthern Corridor Implementation Authority (NCIA)

DirectorProfessor Dato’ Dr. Omar bin OsmanVice ChancellorUniversity Sains Malaysia

DirectorMr. Ooi Boon ChaiChairmanPenang Skills Development Centre (PSDC)

DirectorEn. Mohd Khairul Adib Abd. RahmanMOSTI

DirectorDato’ Dr Mohd Sofi OsmanAltera

DirectorChris KellyINTEL

DirectorDr Hari NarayananMotorola Solutions

DirectorEn. Farid WajidiNorthern Corridor Implementation Authority (NCIA)

Chairman Dato’ Azman MahmudChief Executive OfficerMalaysia Investment Development Authority (MIDA)

DirectorEn. Mohd Khairul Adib Abd. RahmanMOSTI

DirectorDr. Kamarulzaman Mohamed ZinSilterra

DirectorChris KellyINTEL

13

GOVERNMENT

INDUSTRY ACADEMIA

• Advanced & well equipped shared services

• Product & process improvement

• Downstream & outsourcing opportunities

• Human capital • R&D ecosystem

• Local & Foreign linkages• Industry driven programs• Increased IPs and patents

• Industry exposure for postgrads

• Access to best manufacturing practices

• Commercialization of R&D

• Sabbaticals & internships

• SME Development• No duplication of resources• Comprehensive monitoring &

channelized efforts• Greater multiplier effect• Optimization of funds

Partnership Model

14

What is in the offing?

Network of shared services

Involvement of local companies

Cross-company sharing arrangements

Outsourcing opportunities in the realm of design and

development

Wider collaboration between academia/industry

Network covering LED testing and design centre, failure analysis labs, embedded system labs, RF labs,

IC design centres

39.5% of research projects involving local firms (by value)

Microprocessors Embedded systems LED Material sciences

Hardware Software Integration

Increasing opportunities from MNCs for outsourced design and development activities

Involving also top universities from abroad:• University of Cambridge

• UC Santa Barbara

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CREST

C

C

C

CC C

C

M

SAS

A AS

A MS

AM

A

M AM

S

S AS

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A

A

A

A

S

S

A

SM

A

CS

CREST

CC

C

A

M

M

A

S

A

C

CS

SM

A

A

M

CREST

CC

C

S

M

A

M

A

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Phase 1 (Seeding)2012 - 2014

Phase 2 (Cluster Focus)2015 - 2017

Phase 3 (Take off)2018 - 2020

• Creating collaboration research platforms (for Industry and Academia)

• Growing talent & Pool of Experts

• Developing specialization & Drive Innovation

• Developing a network of technology clusters

• Generating international partnerships & collaborations

• Establish a solid ecosystem

• Enabling development of technopreneurs

CREST Strategy – Envisioning 2020

16

Roadmap: Today (Seeding)

Collaboration

14 academic institutions 13 Locals and 1 International

28 Companies 18 Locals and 10 MNCs

82 Post-graduates 16 in 2014, 39 in 2015, 27 in 2016

36 commercializable IPs1 in 2014, 19 in 2015, 16 in 2016

195 Publications11 in 2014, 81 in 2015, 92 in 2016

Projected Outcomes

RM36 million, 51 projects65% industry and 35% Government

17

As a start: 28 companies, 14 academia, 51 projects | Collaborate

18

Roadmap: Cluster Focus

R&D

Phase 1: Seeding2012 – 2014

Phase 2: Cluster Focus2015 - 2017

Phase 3: Take Off2018 - 2020

51 R&D Grantsinvolving 28

companies, 14 academic institutes

Optoelectronics (LED Epitaxy, LED apps)

Continuous R&D Grant programs

Embedded (Wearable)

Embedded (Internet of Things)

EEV technologies

Printed electronics

19

Where are the OPPORTUNITIES?

R&D

Phase 1: Seeding2012 – 2014

Phase 2: Cluster Focus2015 - 2017

Phase 3: Take Off2018 - 2020

51 R&D Grantsinvolving 28

companies, 14 academic institutes

Optoelectronics (LED Epitaxy, LED apps)

Continuous R&D Grant programs

Embedded (Wearable, IoT)

Embedded Solutions, Ubiquitous Computing, Augmented Reality

Healthcare, Mfg., Lighting, Transport….

Wearable, Large Area / Organic Electronic, CNT/Graphene

Wireless/BB/LTE Communication

Sensors – Physical, Chemical, Bio, Optical

Big Data, Network Security, Cloud Services

Advanced Energy harvesting/storage/transmission

UI/UX specific/defined SoC/IC/FPGA

The New New Thing

20

RM100mR&D Grant

Research & Development

2 CyclesPer year

21

2012

2013

Approved

53 applicationsWorth RM 35.8m

(INDUSTRY RM 23.2m [65%]CREST RM 12.6m [35%])

R & D (Collaborative)

Evaluated

127 applicationsWorth RM 98m

100m R&D Grant for 10 years

22

Nurturing Industry-Ready GraduatesIndustry-Relevant Curriculum & Finishing School

4 Years B.Sc. in Engineering +ExistingTalent

NewTalent

Year 1-2Industry Awareness

Year 3-4 + max. 6 monthsFinishing School

FasTrack, SNUCOEHIT-RSE, TESSDE

GEMS

High $Limited talent

• Early Career Awareness• Industry Workshop

• Innovation Challenges and Entrepreneurship Program

• www.thegreatlab.com

• Industry-Driven Curriculum, Blended Learning (MOOC)• Extended Internship (6-18 months), Accel. Industrial MSc/PhD

• Industry-based projects- Project Hopper• Adjunct Lecture & Lecturer Attachment

• Talent Database Mapped to Industry Requirements

Low $Higher talent

• Limited internship period, 10-12 weeks • Limited industry involvement – IAP, FYP, Innovate Malaysia

• Year 4 career talks & fairs

IndustrialMSc/PhD

1 Year Up-skilling

Immediate Intervention, 2011-2014

Sustainable Industry-Relevant Graduate Program, 2013-2020

23

Cluster Development

R&D Ecosystem: Major Clusters

24

Match-making

Commercialization

25

From researchers to MNCs

ResearchersGrant recipientsAcademiciansIndustry researchers

Start-upsPost Grant RecipientsCo within the ecosystemsResearchers interested to be entrepreneurs

SMEsE&E and supporting Co. in the regionCo. through our engagement within the ecosystem

MNCs

From start-up funds to operational funding

CREST Level of Engagements

Bridging the GAP

26

THANK YOU