Guan Eng questions Penang’s loss of IC park project to Selangor

Lim Guan Eng says Penang should find out how it lost out despite the advantage it has as a regional tech hub.

GEORGE TOWN: Penang chief minister Chow Kon Yeow has been urged to explain how the state has lost a multi-million ringgit integrated circuit (IC) design project to Selangor.

His predecessor Lim Guan Eng said Penang should find out how it has lost the game despite the advantage it has as a regional tech hub.

“Penang should have vied for the project in the first place,” Lim said.

In response, Chow said Penang is still committed to boosting its economy through strategic investments, including nurturing local IC design companies.

Recently, Selangor announced that it will be building an IC design park in Bandar Puteri, Puchong. Work on the project is expected to begin in July.

Notable tech-related companies such as ARM Limited and Phison Malaysia have already made commitments to set up operations in the park, touted to be the largest in Southeast Asia.

ARM, a subsidiary of Japan’s SoftBank, is renowned for its intellectual property cores (IP cores) used by global tech giants. An IP core is a reusable integrated circuit layout design.

SoftBank licenses its designs to more than 1,000 firms such as Apple, Microsoft and Samsung.

Phison Malaysia, founded in 2000 by Pua Khein-Seng who is renowned for creating the world’s first single-chip USB flash drive, is an independent supplier of NAND Flash controllers and an extensive storage solutions provider.

IC design is the process of designing microchips that are fundamental building blocks for electronic devices such as smartphones, computers and other consumer electronics.

The IC design park project is aligned with Putrajaya’s goal of shifting the focus of the local tech sector from back-end chip manufacturing to high-value front-end design work.

Lim told FMT a post-mortem should be carried out to determine how Penang missed the opportunity when it leads in the sector.

“Penang should have spent money to woo investors,” he added.

He said that with more than RM2.1 billion in reserves as of 2018, the Penang government should have ploughed some funds into efforts to get big players in the IC design sector to set up shop in the state.

“I was told that the Selangor government has pledged RM65 million for the project and it has received another RM60 million in federal funds,” Lim said.

He said he has also been informed that venture capitalists involved in the project have pledged another RM75 million for the park.

“This is an important investment in our future digital, internet-of-things (IoT) and artificial intelligence technology (capabilities),” he said.

He said Penang should have won over the investors given that its ecosystem is perfect for an IC design hub. “This will also create thousands of jobs for locals,” he added.

Lim also said what was troubling was the potential reverse investment, where Penang-based tech companies started relocating to the Klang Valley since a major IC design hub was taking shape.

He said this would also lead to brain drain, as talents would likely leave Penang as the salaries offered by the companies in the Klang Valley would be significantly higher.

Chow, who issued a statement in response to Lim’s comments, commended Selangor for the initiative and expressed readiness to collaborate with the state for mutual economic growth.

He said that Penang, with its decades of manufacturing expertise, is poised to deepen its integration into the global chip supply chain.

He said the state’s proactive measures, including the introduction of the Silicon Island project, will diversify its economic base with a focus on high-tech sectors.

“Penang, with its expertise in the manufacturing sector built over five decades, has become a ‘natural magnet’ for back-end chip manufacturing,” he added.