Malaysia holds roughly 13% of global outsourced semiconductor assembly and test capacity and ranks among the world’s six largest semiconductor exporters. Yet this industrial strength is not reflected in its capital market. Semiconductor companies listed on Bursa Malaysia account for only about 3.0% of total equity market capitalisation, while the broader electrical and electronics (E&E) sector contributes around 40% of merchandise exports.

The National Semiconductor Strategy (NSS) sets a MYR500 billion investment target, of which MYR475 billion must come from private sources. Approved E&E investment from 2021 to 2025 averaged 96% foreign and just 4% domestic funding. This study argues that industrial policy and foreign direct investment alone cannot finance Malaysia’s move into higher-value activities, and that capital markets must be central to the effort.

The report proposes a dual-pronged capital market strategy, with two tracks running in parallel. The Acceleration Strategy, focused on the short to medium term, converts existing industrial substance into market participation through partial or secondary listings of Malaysia-based multinational operations, strategic carve-outs and a listing-readiness pathway for mature domestic suppliers. The Greenfield Strategy, oriented to the medium to long term, seeks to de-risk and catalyse new domestic capital for integrated circuit design, advanced packaging and R&D-intensive capabilities. Proposed instruments include listed closed-end growth funds, credit-enhanced bonds and sukuk, Business Trusts and catalytic co-investment by Government-Linked Investment Companies and development finance institutions.

Government plays an enabling role in both tracks, through financial incentives, convertible grants, co-investment and strategic procurement that helps domestic firms secure early customers. The report also calls for closer alignment between industrial and capital market policies, building on the Capital Market Masterplan 2026–2030 (CMP4), the New Industrial Master Plan 2030 and the NSS.

Together, these measures aim to move Malaysia from host to owner, with Malaysian capital, institutions and savers holding a growing share of the semiconductor value chain.

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