Microsoft invests US$2.2 billion in Malaysia, as tech giants eye Southeast Asia

Posted by Admin May 2, 2024 Tech

Microsoft invests US.2 billion in Malaysia, as tech giants eye Southeast Asia

Microsoft will invest US$2.2 billion in Malaysia to develop cloud technology and artificial intelligence, in the company’s biggest investment in the country unveiled on Thursday by the chief executive of the world’s largest company during his whirlwind tour of Southeast Asia.

Silicon Valley giants including Amazon and Google, along with Chinese tech conglomerates such as Alibaba, are making a big push to expand in Southeast Asia, which is home to 700 million people and whose economies are collectively worth over US$3.8 trillion.

The region also offers a safe haven for supply chains from China seeking to avoid US tariffs as the trade war between the two superpowers grinds on.

Microsoft chairman and CEO Satya Nadella at the Microsoft Build: AI Day event in Kuala Lumpur. Photo: EPA-EFE

“We really want to make sure we have world class infrastructure right here in the country so that every organisation, every software developer, every start-up, can use it to really not only build for this country, but for the world and region,” Microsoft CEO Satya Nadella said in his keynote presentation at Microsoft’s AI Day in Kuala Lumpur on Thursday.

The investment will target AI programmers and developers, and also businesses and communities “to drive inclusive economic growth and innovation across the country”, Satya said in a separate statement released by Malaysia’s trade ministry.

Satya arrived from Bangkok, where on Wednesday he unveiled Microsoft’s plan to build a regional data centre. The US tech giant will also invest US$1.7 billion in Indonesia’s AI and cloud technology potential.

Malaysia’s Prime Minister Anwar Ibrahim (right) and Microsoft CEO Satya Nadella in Putrajaya. Photo: AP

Microsoft’s latest investment pledge, which will be spread over four years, will be the single largest since it set up operations in the country 32 years ago, Malaysia’s Prime Minister Anwar Ibrahim said.

The investment will include the establishment of a national AI centre of excellence and AI training for up to 200,000 people.

The investment “proves [Microsoft’s] confidence in our strong economic fundamentals, clear policies, besides being investor friendly and politically stable”, Anwar said.

Competition for tech investments is tight in Southeast Asia, as global supply chains seek safety from sanctions and ease of transitions – which could range from tax breaks to access to sufficient talent.

Microsoft’s larger investment in Malaysia compared to its regional neighbours was not surprising, analysts say, as the country has drawn significant interest from other tech firms that are jostling for dominance in the cloud and AI spaces.

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Malaysia has a clear and centralised policy on the cloud and AI sectors that makes it attractive to firms looking to grow in those areas, said Halmie Azrie, a senior analyst with government affairs consultancy Vriens & Partners.

“It is also in line with Malaysia’s role as a global semiconductor supplier and fierce direct competition with other tech providers like Nvidia for AI, and AWS & Google for cloud computing that have invested into Malaysia,” Halmie told This Week in Asia.

Last December, Nvidia announced that it will work with a local Malaysian partner to develop a US$4.3 billion AI data centre in southern Johor state.

Amazon Web Service, the cloud computing arm of online retail giant Amazon.com, said in March last year that it will spend US$6 billion over 14 years to strengthen its cloud infrastructure in Malaysia, while Google in November signed a deal with the government to train businesses in AI and cloud computing.