$100 billion climb up the chip supply chain

Hi all, this is Gao Yuan writing from Penang. Malaysia aspires to turn an island best known for its heritage sites into a global chipmaking [View in browser]( [Bloomberg]( Hi all, this is Gao Yuan writing from Penang. Malaysia aspires to turn an island best known for its heritage sites into a global chipmaking hub. But first... Three things you need to know today: • Tencent-backed Wukong is an immediate [sensation among PC gamers]( • Apple’s about to start [making the iPhone Pro in India]( • Business groups are opposing [Hong Kong’s proposed cyber rules]( Surging ambition The scenic island of Penang is best known for its well preserved colonial-style mansions, shophouses and traditional Chinese temples that date back to the 19th century. But only a stone’s throw away from its historic architecture and tourist hotspots — on the southeastern part of an island that’s less than half the size of Singapore — hides one of the world’s busiest semiconductor manufacturing clusters. The density of chip factories here is a rare find anywhere on Earth. Intel Corp.’s facility is large enough to require a skybridge connection, and if you walk two blocks down from it, you’ll come upon memory chipmaker Western Digital Corp.’s huge plant. At peak hours, cars of employees jam the nearby roads bumper to bumper. From time to time, you’ll see a 14-wheeler delivering cargo containers into the campus of an Advanced Micro Devices Inc., Micron Technology Inc., Infineon Technologies AG or Lam Research Corp. All have had a presence in Penang for years, some decades. Now the Malaysians want more, a bigger and stronger role in the global chip supply chain to fire up the local economy and expand geopolitical influence. The secret ingredient, in the words of Prime Minister [Anwar Ibrahim](bbg://people/profile/13389848), is to push into the more lucrative areas from chip design to advanced packaging. The 77-year-old’s government has announced a [500 billion ringgit](bbg://news/stories/SE6TW5T0AFB4) ($113 billion) moonshot effort for the semiconductor industry. It’s no easy task, even when you factor in that Malaysia is already the world’s [sixth-largest]( chips exporter and a testing and assembly powerhouse. Its chip design industry is in its infancy, at best. The US, Taiwan and Japan are building the most advanced chipmaking plants. Local universities are struggling to mint the engineering talent required to close the gap on those leaders. The challenge goes on. But in Penang, I was immersed in an atmosphere of optimism and determination. From senior executives at chip plants to industry experts, people genuinely believe that the government support plus geopolitical tensions around the Taiwan Strait are going to offer Malaysia a once-in-a-generation opportunity to climb up the supply chain ladder. I’m no stranger to such excitement. When I was covering the industry in China over the past decade, local chip projects easily secured eye-watering sums of government investment. Some of them went on to fail spectacularly, and the reasons were a mix of insufficient long-term planning, research getting bogged down and a helping hand from US sanctions. In Penang’s case, things seem different. The most important distinction is that the place is already a solid and valued part of the global supply chain. Malaysia isn’t starting from scratch, many of the companies whose business it’s trying to attract are already here, and it’s aiming to evolve and upgrade rather than start something entirely new. The growth also appears organic. The biggest chipmaking projects here are led by foreign giants such as Intel and Infineon, which have a more long-term vision for the plants. Towering cranes are piecing together the last parts of Intel’s new advanced packaging plant on the island.
In Infineon’s [freshly built]( silicon carbide factory in Kulim — Penang’s neighbor — workers in jumpsuits are making the next-generation power management chips for electric cars and AI data centers. The government’s job is now simple: Attract more big-time overseas players, train more engineers and support more local suppliers. For Penang, the chip dream that’s been 50 years in the making is only just beginning.—[Gao Yuan](mailto:ygao199@bloomberg.net) The big story Autonomy co-founder Mike Lynch is missing after a tornado struck the luxury yacht he was on, [celebrating his acquittal in a multibillion-dollar fraud case.]( Separately, Lynch’s co-defendant in the HP case — former Autonomy vice president for finance Stephen Chamberlain — was fatally struck by a car on Saturday while out running. One to watch [Big Tech's AI Promises Under Scrutiny as Tech Stocks Rebound Ameriprise Financial Private Wealth Adviser Jason Betz joins Ed Ludlow and Caroline Hyde to discuss why investors are becoming more nervous about an Nvidia downside as tech profits are slowing and tangible results from investments in AI remain yet to be seen. He speaks on Bloomberg Technology.]( Get fully charged AMD is buying server maker ZT Systems in a $4.9 billion bid [to close the gap on Nvidia.]( US power developers boosted generation capacity in the first half of the year [by the most in more than two decades.]( The Democratic National Convention is letting influencers in, to [help the Kamala Harris campaign for president.]( More from Bloomberg Get Bloomberg Tech weeklies in your inbox: - [Cyber Bulletin]( for coverage of the shadow world of hackers and cyber-espionage - [Game On]( for reporting on the video game business - [Power On]( for Apple scoops, consumer tech news and more - [Screentime]( for a front-row seat to the collision of Hollywood and Silicon Valley - [Soundbite]( for reporting on podcasting, the music industry and audio trends - [Q&AI]( for answers to all your questions about AI Follow Us Stay updated by saving our new email address Our email address is changing, which means you’ll be receiving this newsletter from noreply@news.bloomberg.com. Here’s how to update your contacts to ensure you continue receiving it: - Gmail: Open an email from Bloomberg, click the three dots in the top right corner, select “Mark as important.” - Outlook: Right-click on Bloomberg’s email address and select “Add to Outlook Contacts.” - Apple Mail: Open the email, click on Bloomberg’s email address, and select “Add to Contacts” or “Add to VIPs.” - Yahoo Mail: Open an email from Bloomberg, hover over the email address, click “Add to Contacts.” Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Tech Daily newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](