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Inside Malaysia's Intel Factory, A Global Hub Of The Microchip Market

As the importance of the global microchip economy continues to grow, companies like Intel may one day reign supreme over today’s corporate giants: Meta, Apple and Google. And, in a measure some are calling “reverse globalization," production is beginning to move back into the Global North, including Poland. In a rare visit to Intel’s factories in Malaysia, Polish daily Gazeta Wyborcza takes a look into what the future of its manufacturing will look like.

image of a woman fixing a computer

An Intel factory in Malaysia

Rafał Pikuła

KULIM & PENANG — Today, microchips are even more important than oil. Although some say that data is the gold of the 21st century, the existence of data, and its processing and analysis, would be impossible without integrated circuits.

And unlike oil, which can be bought from many countries, the production of computing power depends on tools, chemicals and software which are often available from only a few companies — or sometimes only one.

In this way, Intel, Texas Instruments and the Taiwanese TSMC are companies which may have a greater global impact in the future than Apple, Meta or Google.

“At the heart of digital computing, there lie millions of zeroes and ones. The entire digital universe is made up of these two numbers. Every photo, every button on your iPhone, email and YouTube video is encoded with endless strings of 0s and 1s. But these numbers don’t really exist. Rather, they are a representation of whether or not electricity is flowing (1) or not (0). A microchip (or "chip") is a system of millions or billions of transistors, tiny electrical switches that turn on and off to process and store strings of 0s and 1s, and convert real phenomena, such as images, sounds and radio waves, into millions of millions of these two numbers" — this is how economic historian Chris Miller explains the essence of semiconductors in his best-selling book Chip War: The Fight for the World’s Most Critical Technology.

In June, tech giant Intel announced its plans to invest $4.6 billion USD in a semiconductor assembly and test plant located just outside of the city of Wrocław, in Western Poland. The measure was hailed by Polish Prime Minister Mateusz Morawiecki as "the largest greenfield investment in the history of Poland."

To explore the future machines, processes and work philosophy which will reach Poland once Intel opens its plant in 2027, Polish daily Gazeta Wyborcza traveled to semiconductor assembly and testing plants in Kulim and Penang, Malaysia, which will be a model for the plant set to be built in Poland.

image of a group of people

Members of the team


The Malaysian Silicon Valley 

The semiconductor industry has been globalizing for several years now, laying the foundations for the present supply system, which is mainly located in Asia. The Malaysian centers in Penang and Kulim are the key assembly and semiconductor testing factories for Intel, which is a major player in the global chip market.

Although working on microchips is extremely complicated, and requires enormous knowledge and advanced technologies, Intel has lifted its veil of secrecy to allow Wyborcza’s staff to visit.

“Semiconductor availability, supply chains and investments will be more important than oil for global geopolitics for the next several decades," Intel CEO Pat Gelsinger said during this year's meeting in Davos.

He is not alone in sharing this sentiment. AK Chong, managing director of Intel in Malaysia, also said that the importance of the factories in Kulim and Penang is much greater than it may seem. “The foundations of the modern world are created here ... The manufacturing and miniaturization of integrated circuits are the greatest engineering achievements of our time," she said during a press conference.

image of a factory and 2 workers

Inside the factory


Absolute sterility 

The first issue when visiting Intel factories is safety — both that of the visiting journalists and, perhaps above all, the security of the company’s knowledge and processes. When entering the factory, we were asked to leave our bags, backpacks and phones at the entrance. We were also instructed to put on special suits and safety goggles.

Absolute sterility is the primary requirement of the so-called clean room, where semiconductors are assembled and integrated. While in an ordinary, freshly cleaned room the cleanliness is several million particles per cubic meter of air, in a “clean room” it is less than a thousand. Any speck, hair, or piece of skin can prevent a microchip worth thousands of dollars from working properly.

The first step in microchip assembly is cutting rectangular pieces from silicon wafers, which consist of wholesale silicon processors. The chips are flat, but are made up of over 20 layers, which create a complex system of electrical connections.

Looking at the processor under high magnification, it looks like some kind of complicated, futuristic highway, running across several levels.

Up to 1,000 processors can be cut from one silicon wafer, but some may be defective, which is detected during rigorous testing. The off-cuts are immediately disposed of. Even though they are incredibly expensive, there is still no way to recycle them.

Now, technology manufacturing is also beginning to return to the Global North.

When the microchip cores are first made, they are devoid of both their casings and any external connections. Therefore, they need to be encased in so-called “cottages." To do this, the chips are mounted on special boards. The size of these boards can vary, depending on the type of the device, and its level of advancement. These devices can range from ordinary SIM cards to computer motherboards, and are connected and secured with titanium tiles. When connecting the chip, a special material is used to optimize operation in terms of mechanical, thermal and electrical efficiency. "Gluing" and wiring takes place in huge machines, but the entire process is visible thanks to the transparent glass, which makes up the machinery.

Up until the 1970s, this process was done entirely by hand. With the help of a microscope, factory workers linked wires, mere millimeters or nanometers wide, with immense precision. Just 60 years ago, the number of transistors in the then-most modern integrated circuit was not 11.8 billion, like today, but four.

This is a colossal difference. And today, the technology is too intricate to be assembled by humans. The process has been fully automated.

In Intel's assembly room, the automation process has gone even beyond this complex assembly, and other tasks, including the transport of silicon waffles and complex plates, are done by self-propelled intelligent robots.

Between assembly processes, the microchips are tested. This includes "naked" chips, as well as already encapsulated “cottages” and entire boards. Integrated circuits are tested in various ways to ensure their quality: they are built to withstand changes in temperature and pressure, and to have a set amount of weight placed on top. Most importantly, the chips are tested to determine whether or not they work in the first place.

There are 16 testing stations in the Penang testing facility. Each is fully automated, but managed by humans.

old photo of a factory with workers

The factory in its early days

Intel Free Press/Flickr


Intel’s two factories in Penang and Kulim employ over 15,000 workers. The company, which has been present in Malaysia since 1972, has long been an important employer for the country, and a key element of the “Malaysian Silicon Valley."

Currently, about 400 technology companies from around the world have factories on Penang Island. Since 2020, about 500 million microchips have been assembled and tested at both Intel factories. Both operate 24 hours a day, seven days a week.

In Malaysia, Intel's production will soon be expanded, with the addition of two new facilities with 2 million square feet of manufacturing space, which will further expand its current processor assembly and testing capabilities.

Before the middle of the century, Asia's vast supply of cheap labor attracted chipmakers seeking to lower wage costs. Governments and corporations in East Asia have used foreign integrated circuit factories established in the region to learn about the most advanced technologies and their final development.

But now, technology manufacturing is also beginning to return to the Global North, including Poland.

Intel's growing presence not only in Malaysia, but also in Poland, is an attempt by the U.S. to rebuild its semiconductor power. The United States still has a dominant position in the silicon chips that gave Silicon Valley its name, but its position is weakening: its dependence on Taiwan remains huge, and the threat from mainland China continues to grow.

Americans are staying in Asia, but they are focusing on regionalization. Now, Europe and Poland will learn from Malaysia.

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