44 percent of Malaysian electrical and electronics (E&E) companies are optimistic about their business performance in the first quarter of 2025, which shows continued positive sentiment, a survey from the Malaysia Semiconductor Industry Association (MSIA) showed Tuesday.

MSIA said in its latest findings from the MSIA E&E/ Semiconductor Quarterly Pulse Survey for the fourth quarter of 2024 on Tuesday that 37 percent of companies reported better business performance in the fourth quarter 2024 compared to the third quarter 2024.

However, the business performance was not as strong as in previous quarters (46 percent in the third quarter of 2024 and 39 percent in the second quarter of 2024.

Companies are also projecting slightly lower optimism when compared to previous quarters (53 percent in the third quarter of 2024 and 60 percent in the second quarter of 2024).

The findings also showed for the next 12 months in 2025, 66 percent of companies expressed optimism in overall outlook, similar to previous quarters.

There is uncertainty in the short term but companies are more optimistic in the medium to long term, MSIA said.

According to the survey, 44 percent of companies are optimistic about their investment outlook for the first quarter of 2025.

Companies, however, are projecting marginally lower investment optimism when compared to previous quarters (52 percent in the third quarter of 2024 and 58 percent in the second quarter of 2024).

Meanwhile, the findings showed talent shortage and market competition/ order book remained the primary challenges for the semiconductor industry in the fourth quarter of 2024, similar to previous quarters, with additional challenges such as supply chain disruptions and US-China Chip War becoming more pronounced.

These companies, nevertheless, are focusing on expanding into new markets, cost reduction initiatives, investing in new technologies, and increasing market share to address these challenges.

The findings also showed 57 percent of companies sees opportunities for Malaysia if there are continued escalation in the US-China chip war.

Thus, MSIA highlighted Malaysia should diversify its semiconductor markets, diversify its supply chain and focus on talent development to remain competitive and resilient if there are continued escalation in the US-China chip war.

It is also noted that 72 percent of companies are hiring engineers and technicians in the first quarter of 2025, indicating continued hiring sentiment from previous quarters.

“The survey results reveal that 2025 will present notable challenges for the Malaysian semiconductor industry, including talent shortages, market competition, and external geopolitical pressures,” said Wong Siew Hai, president of MSIA.

Despite these headwinds, he said the industry remains steadfast and prepared, leveraging innovation, collaboration, and strategic planning to turn challenges into opportunities and maintain its competitive edge.

He also highlighted that 2024 marked a pivotal year for Malaysia with the launch of the National Semiconductor Strategy (NSS) in May 2024.

According to him, this strategic initiative underscores Malaysia’s commitment to staying ahead of global competition with a focus on Malaysian capability and expertise in key areas like integrated circuit (IC) design, semiconductor equipment and advanced packaging.

MSIA is an industry association which cover individuals and companies incorporated in Malaysia who are involved directly or related to semiconductor industry (electronics and systems), semiconductor industry supply chain, institutions providing significant related services to semiconductor industry such as engineering, finance, legal and those societies, associations, chambers and government-linked agencies.

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