IT Export Market
Export Market
Malaysia aspires to be a software exporter in the future and seeks to position itself as a regional center and hub for value-added activities such as software research and development, IT training and education as well as warehousing and distribution.
At the present Malaysia is a hardware exporter and the chart below details the export market.
The composition of the Malaysia IT market for 1993 and 1998 projected was/are as follows:
MARKET COMPOSITION (PERCENTAGE OF SHIPMENT VALUE)
| Sector | 1993 | 1998 (Projected) |
| Hardware | 60.30% | 49.70 % |
| Services | 20.20 % | 27.30 % |
| Software | 15.40 % | 19.50 % |
| Data Communications | 4.10 % | 3.50 % |
Source: IDC Malaysia
Hardware
Malaysia is the third largest producer of semiconductors and the largest exporter in the world. In 1993 Malaysia produced $7.18 billion worth of semiconductors, an increase of 30% over 1992. The value of production is anticipated to continue to grow at double digits. Companies producing semiconductors in Malaysia include Advanced Micro Systems, Harris, Hitachi, Intel, Motorola, National Semiconductor, Hewlett Packard, NEC, Phillips, SGS-Thomson and Texas Instruments.
In 1993 Malaysia exported $7.18 billion worth of semiconductors, an increase of 30% on the previous year. This represented approximately 9% of the total value of global semiconductor production. Malaysia is the world's third largest exporter of semi-conductors, after the U.S. and Japan. All of Malaysia's semiconductor production is currently exported. U.S. firms account for over half of Malaysian semiconductor production, most of the rest being produced by Japanese and European companies.
The Malaysian semiconductor industry is still focused almost exclusively on final assembly operations, with relatively low value added. Only one plant is engaged in wafer fabrication, for a relatively low-end product. In 1993, the import content of semiconductor production was $7.04 billion, meaning that net semiconductor export earnings were only $126 million, barely 0.3% of gross export value (against an average of 15% 1985-90).
At some point in the next three to five years, Malaysian semiconductor production is expected to move upstream, as multinational electronics firms invest in wafer fabrication facilities. Near-term investment is expected to focus on increasingly sophisticated assembly and test equipment, required to raise labor productivity and produce higher value end items. 3
Software
There are no reliable published statistics on sales, export or production figures for software. Statistics below are based on market, industry, press and association sources but provide a reasonable basis for comparison. Most business software is imported as local production has been hindered by the sever piracy rates. Lately an increasing number of` local financial/accounting software packages have surfaced though this are not yet of world class export quality.
Peripheral Devices
Malaysia produces several peripheral devices, production ranges from hard drives to modems and other related miscellaneous devices. This sector is small compared to major export which is semi-conductors.
Services
As with the other segments of the IT market Malaysia’s service sector is still developing. The education system is in the process of teaching these skills but at the present there is not a large pool of local systems engineers.
Software and Software Services and Market Niches
Malaysia is clearly the Asian leader in semi-conductor manufacturing and is planning to produce even more and more sophisticated products. Due to professional system engineer shortages and the ever continued demand abroad for sophisticated computer software programmers Malaysia has not developed a strong software and service niche. Clearly Malaysia will continue to develop the application software though not as quickly as its western counterparts but will retain its focus on the production of semi-conductors.2
