Malaysian E & E Sector

A Quick Overview of Trends & Challenges

Looking Ahead

Sanjay Singh

Frost & Sullivan

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Agenda

• Global Electronic Trends

• Malaysian E&E Overview

• Issues and Challenges for Malaysian E&E Sector

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Global Electronics Industry Trends

Measurement

Est. Global E&E Revenues, 2009 $3.2 trillion

Est. Global Semiconductor Revenues, 2009 $230 billion

Mobile phones and PCs will continue to do well through 2010

Smartphones & converged mobile devices witness growth in most markets

An increase in broadband penetration will drive growth of devices

HDTVs & Web-enabled TVs will be an interesting segment to watch

3D TV & Electronic book readers are likely to make headway in 2011

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Semiconductor Market in 2009

COMPUTERS

COMMUNICATIONS

CONSUMER

Total semiconductor revenue for 2009 stood at~ USD230 billion

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Consumer Electronics/Computers : Faster, Smaller, Cheaper and Innovative with

Even Shorter Development Life-Cycles – Growth Drivers for Semiconductors

From Laptops To TabletopsFrom 2D to 3D HDTV

Mobile Phones: Projection,

Visual Search and Morphing

Laptops with integrated monitor and

keyboard.

Holographic “Projection Keyboard”

Technologies in 2020

3D HDTV– use of auto stereoscopic

displays with micro lenses) to

transmit images differently to right

and left eyes

Touchscreen Window With Built-in

Camera, Scanner, Wi-fi, Google Maps

Intuitive Search Tools.

Mobile Projection Technology

Morphing– Allowing Users to Transform

Mobiles Into Different Shapes

E-Media

E-Book

Reader

E-Newspaper

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Malaysian E&E Sector

Year Total Exports Malaysia E&E exports

2009 RM411.4 billion RM227.8 billion

2008 RM464.5 billion RM255.4 billion

E&E Industry in Malaysia – Market Overview

More than 1,700 E&E companies, 28.8% of labor force

Major segments – Industrial electronics (RM111 billion),

Electronic components (RM97 billion)

Malaysia E&E Exports, 2008-2009

Consumer Electronics

• Leading companies are undertaking R&D activities in Malaysia to support their APAC markets.

• USD6.9 billion in exports

Electronic Components

• Mainly Semiconductors manufacturing undertaking ATP

• Industry is volatile.

• Constitutes 38% of the total electronics exports

Electrical Equipment

• Major Malaysian products - air-cons, refrigerators, washing machines and vacuum cleaners

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Global OEMs like Samsung, Hitachi, Matshushita,

Mitsubishi, Toshiba & Contract Manufacturers

like Flextronics, Celestica, Solectron

and Jabil Circuits

High Tier Local Suppliers

like BCM, Globetronics

Unico, LKT, Eng

Teknologi

Low tier

Mfrs

Can the lower

tier companies

at the bottom

support the

upper tier?

Malaysian E&E Sector

time

Innovation,

R&D,

Testing

Focus

Commerciali

zation,

Testing,

Limited

Production

Mass

Production,

Process

Innovation

Cash Cow,

Mature

Production

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R&D

Valu

e a

dded p

er

em

plo

yee

Product

Design

Assembly &

testing

Technology &

Process CreationPackaging System

solutionsDistribution Marketing /

Branding

Knowledge Based Labor / Cost based Resource based

High

Low

Malaysia in transition..??

TECHNOLOGY CAPABILITIES:

Application / operation

Process innovation

Product innovation

Marketing

Country Competitiveness

Are we stuck in the middle ?

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Emerging Trends

1. Greater “electronic”ization of products and technology

convergence with globalized production networks

2. OEMs to outsource more activities and products to focus on

activities adding higher value and those serving as core

differentiators

3. Expectations of higher growth trends and EMS adoption in niche

areas like healthcare (medical equipment); A&D; Industrial and

Automotive• ODM model is better suited to product categories (i.e. PC, notebooks)

where IP is subsumed in the components

• EMS model is best suited to product categories (i.e. medical equipment,

network infrastructure) where IP is held by OEMs

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Emerging Trends

• Moving forward, the following key forces / issues are expected

to impact EMS / ODM companies

• “Green” factor

• “Bottom of pyramid” market / segments

• Emphasis on Support and Services

• Companies need to take these into account as a part of their

business strategies

• Can Malaysia leverage its strengths to capitalize on the same?

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So what are the key issues before Malaysian E&E?

Foreign Investments

• FDI inflow into E&E sector lacking

• In 2009, Global FDI dipped by 37%, Malaysia’s FDI fell by 81% from 2008

• Measures by the government to reverse this trend

• Liberalization in key sectors of the economy

• New Economic Model (NEM)

• Economic Transformation Program (ETP)

• Record of RM14 billion investments for the 1st six months of 2010

Human Capital the weak spot in Malaysian E&E

• One of the key factors under the New Economic Model (NEM)

• Quality & Quantity

• Foreign Talent

• Policies to attract foreign knowledge workers

• No top universities

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Thank You!