Penang pushes medtech as its hedge against the chip cycle — and medtech tenants are the strongest industrial occupiers in Penang

Penang's medical technology cluster is being pushed forward as the state's answer to an uncomfortable question: what happens when the semiconductor cycle turns?

Chief Minister Chow Kon Yeow told the International Medical Device Exhibition and Conference (IMDEC) 2026 at KLCC on 26 August that medtech "is no longer a niche sector in Penang" but an increasingly important pillar of the state's high-value manufacturing base.

His argument is that Penang did not build this from nothing. "Leveraging over 50 years of industry excellence in the E&E and semiconductor sector, where precision and automation are essential, these competencies translate directly into the production of surgical instruments, implants and high-accuracy medical devices," he said. "Penang did not build its MedTech ecosystem from scratch. It built on the industrial capabilities it had already developed and continued moving them into higher-value applications."

Why this matters for industrial property

medtech tenants do not simply leave.

InvestPenang CEO Loo Lee Lian put the mechanism plainly to The Business Times: "Medtech is a very attractive industry because margins are high, and companies tend to stay for the long term. Once they invest in a facility and obtain regulatory approvals, they usually continue operating there for many years."

That is the whole point. A medical device plant is validated to a specific site. Regulatory approvals attach to the facility, so relocating means requalifying — an expensive, slow process that manufacturers avoid. Compare that with the contract-manufacturing tenants who can shift a line to another country in a cycle. For anyone holding industrial land or built factory space in Penang, a medtech occupier is about as sticky as tenants get, and their fit-out spending is heavy enough that they behave like long-term owners even when they lease.

The clustering effect works the same way. "Clustering is very important. We already have the ecosystem and the talent that understands this industry," Loo said, noting that global medtech manufacturing concentrates in a short list of places — Minneapolis, Boston, Ireland, Costa Rica. Penang is arguing for a seat at that table, and Chow made the comparison explicit, saying the state has the foundation to establish itself as a leading offshore manufacturing hub for medical devices "alongside established hubs such as Puerto Rico, Ireland and Costa Rica".

The numbers

Chow said Malaysia is home to 12 of the world's top 30 medical technology companies, and that seven of them run major facilities in Penang: Abbott, Boston Scientific, B. Braun, Smith+Nephew, STERIS, Dexcom and — most recently — Intuitive, whose Penang investment was announced two weeks before the conference. That, he said, gives Penang "the strongest concentration of leading MedTech companies in Malaysia and also Southeast Asia".

The anchor tenant is the oldest one. B. Braun set up in Penang in 1972, its first manufacturing site in Asia-Pacific, and has since invested close to RM5 billion in Malaysia, running five plants covering about 180,000 sq m. As Loo framed it: "What Intel did for semiconductors, B. Braun did for the medical device industry."

On investment and trade, Chow gave these figures:

• RM2.3 billion in approved manufacturing investments in the scientific and measuring equipment sector, including medtech, from 2021 to Q1 2026 — nearly 20% of the national total for the sector, across 40 projects, creating close to 4,500 jobs.
• RM429 billion in total Penang exports in the first half of 2026, or 44% of Malaysia's exports.
• RM238 billion in exports of optical, measuring, precision, medical and surgical instruments from 2021 to H1 2026 — an average of 64% of Malaysia's total in that category.

Two figures on a different basis are worth noting alongside these, because they cover a different window: Penang drew RM3.6 billion in approved medtech investments from 2020 to H1 2025 across 38 projects and 3,200-plus jobs, a figure cited by both The Business Times and the Association of Malaysian Medical Industries. Nationally, Malaysia exported more than US$12.5 billion of optical, technical and medical equipment in 2025, and the medical device industry drew RM4 billion in approved investments across 46 projects that year per MIDA's 2025 performance report.

Beyond the multinationals

The part of Chow's speech most relevant to smaller industrial occupiers was about local firms. Penang now has more than 20 local medtech companies making MDA-registered devices — orthopaedic implants such as screws and plates, single-use urology products, endoscope components, wound and infection control products, dental products, patient isolation transporters, inhaler products, pharmaceuticals, and surgical blades and instruments.

"It is about building local capabilities alongside global capabilities," he said, "and ultimately developing more homegrown champions that can stand out on the global stage."

That local tier is the one that generates demand for mid-sized factory space rather than sprawling campuses — and it is the tier that grows when the multinationals localise their supply chains. The recently launched Penang Automation, Test and Equipment (ATE) Campus, run by InvestPenang, is aimed squarely at that: getting local automation and test equipment firms qualified into multinational supply chains.

Loo also signalled more to come. "We recently announced a life sciences laboratory project and will soon announce another medtech project. We don't want to focus only on semiconductors."

*Cover and photos: Siti Nuratikah Rahmat/Buletin Mutiara.*