National E&E Forum 2020: To succeed, go with the leaders

• Partnering with global tech leaders key to moving up value chain
• MIDA must stipulate MNC engagement with Malaysian SMEs

Taiwan’s Dr Jordan Jiang was asked how he, as the Group CEO and GM of IEI Integration Group, a global Taiwanese supplier of industrial computer products and AIoT (Artificial Intelligence of Things) solutions, charts his organization through the current uncertainty.

"It's no secret," he told the online crowd at Malaysia’s National E&E Forum 2020 held yesterday. "Just go with the leaders." His company followed the technology roadmap of the global tech companies and that has proven a safe and successful method.

The history of IEI corresponded closely to the overall development of Taiwan's industries over the past 20 years, and a key part of it has been through partnering with industry giants such as Intel and Microsoft. In doing so, the Taiwan-based company has transformed from manufacturing basic semiconductor boards to designing cutting-edge turnkey solutions.

In 2017 IEI designed and produced a AI plus IOT development kit, and this year, they launched their IEI Puzzle series, a Multi-access Edge Computing (MEC) solution based on 5G.

Moving up the value chain

It is the kind of growth that the audience at this year's National E&E Forum 2020 wanted to better understand, given that both Taiwan and Malaysia were on par with each other in the 1990s.

"We still see a lot of foreign investors coming into Malaysia because of our competitive costs, and not because of our design and development," fellow panelist Tan Eng Kee, CEO of Greatech Technology Bhd highlighted. His point being that Malaysian E&E players have not sufficiently moved their capabilities up the value chain to attract that higher level of FDI investment. It is a worrying reality for him.

Greatech itself is no slouch, with the factory automation solutions provider having a market cap of US$1.35 billion (RM5.5 billion) today since its June 2019 listing. What is striking about Greatech is that it was only over the past three years, in its 20^th year of operations, that Tan began pushing the company towards innovation.

"You need to find a way to design better, you need to find a way to get a more competitive price, (because) you need to compete in the worldwide market," he explains.

For example, Greatech has eight product lines at the moment, but half of them are not making money – yet. "Their time is not ready yet," he says of the four products. Those latent product lines are currently undergoing research and development, which will then reap profits later.

By example, Tan refers to their electric vehicle (EV) car battery manufacturing. "This EV battery didn't just happen today. It happened three years ago, (when) we created a team, thinking what are we going to do?"

His own experience shows that, "Setting a very clear goal when developing a product, leads to a higher success rate."

His immediate clear goal is to see Greatech launch two products every year. For 2021, the company has allocated around RM15 million for R&D, and plans to hire 100 young graduate engineers. "And we hope that in 2022 we can invest between RM20 million to RM25 million on R&D."

This ambition was lauded by Jiang. "Developing new products is key to growing the motivation or momentum continuously in the company."

MNC collaboration

Tan Teng Wang, Intel Corporation Senior Director for Custom Asic Engineering, then explained the opportunities for cooperation between MNCs and local players. He himself had been involved with the development of the Intel NUC ('Next-Unit-of-Computing') prototype

"We partnered with Malaysian and regional suppliers to build the prototype and shipped this demo to various industry trade shows and the rest is history," he says.

It is this sort of natural development process that Teng Wang says demonstrates the value that MNCs bring to the ecosystem. The first obvious benefit is the resources an MNC brings, which means partners can consider more up-to-date and more forward-thinking technologies.

The second benefit is that MNCs can drive demand, as well as aggregating it. "So, we can achieve economies of scale, which then enables the local supplier to overcome their cost dilemma."

The third benefit is the role the MNCs play in developing talent, not just in R&D, but also in the surrounding ecosystem.

Intel opened its first manufacturing plant in Penang in 1972 (with a legendary picture of founder Andy Grove, ankle deep in a rice field that was to become the site of the first plant), and since then, there has been plenty of opportunity for collaboration. "We are starting to see local professional service vendors now that are outsourcing, whether it be system design, RTL design or validation design."

He highlights the importance of this development in Malaysia’s E&E ecosystem. "This part is crucial for overcoming (costs). To invest everything by yourself from end to end, from system partitioning, all the way to the software stack, I think that's a lot (to be asking of the MNCs)."

Cultivating an environment for R&D, engagement with local SMEs

Despite this positive development, the point was made that the Malaysian government must do much better to encourage higher-value research. "The Malaysian government gives a lot of very good funding for manufacturing, (but) not a lot in R&D," states Tan.

He also points out that MIDA can improve things by encouraging the right kinds of commitments from companies looking to invest in Malaysia. "I think the authorities should oversee partnership programmes, with commitments between the new investor and the SMEs," he says. "We can start with a small project, set a budget on these, and we evaluate every year how the Malaysian SME has done when working with the investor."

And he stresses that this isn't something new. "If you go to China, if you want to invest in China, the policy from the Chinese authorities is to do this also." He believes Malaysia must do the same.

"You need to build a whole culture, for Malaysian companies to move forward." To not move forward is to stagnate and eventually rot, which cannot be an option for a nation aspiring to be a leading digital economy.