Datacom Market Boom Drives Malaysia Tech Surge: $4.6B OSAT Opportunity by 2030, Kenanga Predicts

The global datacom market boom is set to significantly boost Malaysia's technology sector, according to insights from Kenanga Research.

Market projections show explosive growth from $17 billion in 2025 to $46 billion by 2030, fueled by a 20%+ CAGR.

AI Networking Powers Datacom Expansion

Artificial intelligence (AI) networking serves as the dominant driver, compelling hyperscale data centers to scale compute and interconnect capabilities for training and inference.

800G and above technologies are anticipated to surge at a 40% CAGR during the same period.

For Malaysia, a 10% OSAT share translates to an opportunity growing from $1.7 billion in 2025 to $4.6 billion in 2030 at 22% CAGR.

Malaysia's Photonics and Assembly Strengths

Photonics is evolving to be more OSAT-like, with value shifting toward high-precision assembly, reliability qualification, and test throughput.

Local players in electronics manufacturing services (EMS), such as NATIONGATE, stand to benefit from the extended lifespan of pluggable optics and ongoing qualifications with U.S. suppliers.

At least three vendors from China serving a U.S.-based optics firm have relocated operations to Malaysia amid the China+1 strategy.

Kenanga emphasizes monitoring if photonics packaging becomes scalable for outsourcing and if Southeast Asian partners qualify for complex steps like fiber attachment.

Looking ahead, value capture in AI infrastructure will likely favor bottlenecks in packaging, testing, and automation, positioning Malaysia for sustained growth.

The broader photonics demand, including sensing and wearables, reinforces a positive outlook, with AI networking optics driving near-term capex and scaling.