Malaysia’s semiconductor market may reach $4.6B by 2030

A research note released on March 10 by Kenanga Investment Bank Bhd (Kenanga IB) said the rising use of photonics in data communications, particularly in AI data center networks, is gradually shifting value towards high-precision assembly, reliability qualification and testing rather than component performance alone.

The report noted that if the optical module ecosystem continues outsourcing assembly and testing activities in stages, Malaysian OSAT companies could participate in capacity expansion, especially where customers require strong quality systems, yield discipline, traceability and reliability screening.

According to Kenanga IB, key factors to monitor include whether photonics packaging processes become repeatable enough for large-scale outsourcing and whether module owners are willing to qualify Southeast Asian partners for more complex steps such as fiber attachment or alignment, advanced packaging and optical testing.

A worker miniature is placed among printed circuit boards with semiconductor chips, in this illustration picture taken July 5, 2023. Photo from Reuters

Based on forecasts by LightCounting, a market research firm specializing in optical communications and photonics, the OSAT share of the datacom market could grow from about $1.7 billion in 2025 to $4.6 billion by 2030, representing a compound annual growth rate of around 22%.

The report also said automation solution providers are well positioned to benefit from manufacturing challenges in the photonics industry that are increasingly suited to automation.