Arm tokens in hand, what now? 

AFTER months of controversy over Malaysia’s 2025 deal with Arm Holdings Inc, the dust seems to have finally settled.

Three local integrated circuit (IC) design companies have been given formal offer letters by the Malaysian government for access to Arm’s chip-making intellectual properties (IP).

These companies are now a step closer towards realising the country’s long-held dream of producing “Made by Malaysia” chips.

However, securing the coveted Arm IP marks the beginning of what is likely a long and costly journey towards creating commercially viable chips.

Going by two Arm token recipients, this journey will take at least two years and cost around US$80mil to US$100mil, although some of that cost will be borne by offtakers of the chips.

GreatAsic Technology Sdn Bhd is one of three companies receiving the Arm tokens and the lesser known one, as the other two are publicly-listed SkyeChip Bhd and Oppstar Bhd.

GreatAsic’s chief executive officer Ong Chin Hu tells StarBiz 7 the next critical step is to firm up the end customers and determine the chip’s architecture and commercial direction.

“This system architecture phase is the foundation of every successful IC design project.

“No company is going to make such a huge investment without the confidence that there will eventually be buyers for the product,” he says.

GreatAsic is a relatively new name in Malaysia’s semiconductor landscape. But Ong and his team are semiconductor veterans with experience spanning global chip firms such as Marvell Technology, Intel and Broadcom.

Ong’s last role was with StarFive Technology, a China-origin company that specialises in RISC-V technology.

RISC-V is one of the three major CPU architecture IPs, the other two being owned by Intel and Arm.

Although GreatAsic is still developing its system-on-chip platform IPs, Ong says GreatAsic’s ability to secure the Arm IPs was based on the strength of its engineers’ track record and technical know-how.

“We have developed chips before in Marvell and Intel. The government believed we could do it. Customers also believe in us because of our collective track record,” he says.

GreatAsic is close to completing a pre-series A funding round to fund engineering hires, expand operations and speed up the development of its planned projects.

Ong says the company is raising “tens of millions of ringgit” and that the funding is led by a “global venture capitalist” firm.

While the Arm tokens are a major boost, Ong said they only account for roughly 20% to 30% of the overall chip development process, with the bulk of the work and investment still falling on the companies themselves.

Following system architecture, engineers translate the product specifications into a functional chip design.

Even with Arm’s IPs, companies still need to integrate numerous additional components depending on what type of chip they intend to build.

For example, designing an AI and data-centre chip may require a variety of other IPs, aside from Arm’s. These IP blocks are usually licensed separately from third-party vendors as designing them independently would significantly increase cost and development time.

An executive from a Malaysian IC design company tells StarBiz 7 such IPs can cost as much as US$30mil for leading-edge 3 nanometre (nm) chip designs.

“Arm itself provides a list of approved vendors that companies are expected to source these accompanying IPs from,” the executive says.

The next major cost layer comes from electronic design automation (EDA). According to the executive, industry-standard EDA tools are dominated by Synopsys, Cadence Design Systems and Siemens and can cost US$15mil to US$20mil for advanced 3nm chip projects.

Once the IPs and software tools are in place, engineers begin developing the chip using hardware design instructions that define how the chip should behave and how data flows through it.

From there, extensive simulations and validation work are carried out, including prototyping.

“These stages require enormous compute infrastructure, often involving entire server farms.

“High-performance servers themselves can cost millions of ringgit each, with some projects requiring between 20 and 50 servers,” the executive explains.

Once validation is completed, the design moves into physical implementation that will eventually be printed onto silicon wafers during manufacturing, he adds.

The project will finally reach tape-out – the stage where the final chip design database is sent to semiconductor foundries for manufacturing.

At advanced 3nm, the mask sets used during manufacturing – precision glass templates used to imprint the finalised chip design and circuitry patterns onto silicon wafers – can alone cost up to US$20mil, says the executive.

The first physical chips are then manufactured from the design, or what is termed as first silicon, several months later.

The fabricated wafers are then sent to outsourced semiconductor assembly and testing providers, where the silicon dies are packaged and tested before entering post-silicon validation.

According to GreatAsic’s Ong, this is also where costs can escalate if bugs are discovered.

Human capital also represents a major expense throughout the process.

A single advanced chip project can involve around 100 engineers, many of whom need highly experienced senior designers commanding substantial salaries.

These figures are not simply being plucked out of thin air. The executive said even he was taken aback when suppliers first quoted the costs involved in advanced chip development.

“Of course, one can still negotiate, but it cannot run too far.

“Looking at the pricing, developing a 3nm chip using the Arm tokens could conservatively cost between US$80mil and US$100mil, while a 5nm to 7nm chip could still require between US$50mil and US$60mil.

“While software tools like EDA have an expiry date, like a Microsoft 365 subscription, the hardware stays with you.

“The engineers you hire stay with you. You cannot say after the project that you will fire all the engineers,” the industry executive adds.

One possible avenue the government could explore to support the commercialisation of the Arm initiative is leveraging the country’s existing local content incentives for data centres to encourage the use of locally developed chips built using the Arm tokens.

“The government already has incentives where companies can get tax breaks if they meet certain local content requirements in investments like data centres.

“This should not extend to just infrastructure like electricity, water or construction, but should entail core technologies like chips,” the executive says.

Having said that, Ong says Malaysia’s Arm deal is a necessary one, for Malaysia to move further up the semiconductor value chain instead of remaining largely concentrated in the backend.

“Without this kind of access, local companies would find it very difficult to even enter the high-end CPU and AI chip space because the upfront cost barriers are simply too high,” he says.