Intel and Malaysia: 41 years, $4 billion

Spent a fascinating day at Intel’s Penang facility a week ago today with The Register. Up until now it’s been something of a hidden gem for Chipzilla but, as the largest plant outside of the US, it’s a key part of its Asia and global operations.

So exactly why is it such a big deal for Intel? Well it was its first ever foray outside the US some 40-odd years ago and now employs over 6,000 designers and engineers. Crucially it acts as a hub for Intel’s other plants across Asia, providing training and support for engineers from newer facilities in Chengdu, Bangalore and most recently Vietnam.

As if any more proof were needed of its importance to Intel, the firm’s global VP of the Technology and Manufacturing Group, Robin Martin, is based there.

We learned that having everything from product development and design to testing and manufacturing on one site means the firm can respond much quicker to changing market demands and keep up with faster development cycles demanded by today’s mobile computing trends.

Perhaps an even more interesting story, though, is the emergence of Malaysia and Penang as an IT destination during the past 40 years. I spoke to Datuk Noharuddin Nordin, CEO of MIDA, the government’s investment and development agency, who admitted that the reason Intel was lured to the country in the early ‘70s was purely based on cost.

However, the government has taken that early investment and managed to grow it, attracting more big electronics MNCs with skilled labour, solid IPR protection and cheap land.

“We must remember MNCs come here because they want the greatest margins,” he said. “We have to anticipate what’s round the corner and create systems which will help to prepare for that.”

It’s not done a bad job. Intel on its own has invested $4bn in Malaysia over the past 40 years and other big names including Motorola, AMD, Western Digital, Renesas, Bosch and many more have all joined Chipzilla in Penang. Nordin claimed such investment has managed to help to move local firms up the value chain, nurture world class IT talent in Malaysia’s universities and attract MNCs from other related industries like aerospace, medical equipment and automotive.

As we walked through the old colonial streets of Georgetown that evening I couldn’t help but think Penang has come a long way since its days as a British East India Company trading port.

Whether it can continue to lead in the future remains to be seen, with hugely ambitious Asian rivals like China coming up fast. However, alongside Taiwan, Malaysia has something of a first mover advantage in Southeast Asia which will be hard to match in the near-term.