AT&S Expands in Malaysia as AI Orders Fill Kulim Factory

Full capacity in Kulim drives the next expansion

AT&S has reached full capacity at its first Malaysian factory and is planning further expansion in Kulim, Kedah, as demand for the components behind artificial intelligence systems accelerates. The Austria based company has invested more than 1.2 billion euros in Malaysian facilities and operations since setting up in the country last year, with another 500 million euros earmarked for its next phase.

As of November 19, 2025, the company employs about 2,100 people in Malaysia. Its first factory opened in January 2024, followed by a campus worth about 5 billion ringgit at Kulim Hi Tech Park in May. Additional phases are being planned as orders grow for integrated circuit substrates, the finely engineered bases that connect advanced chips to the rest of a computer system.

The expansion links northern Malaysia to the rapid construction of AI infrastructure around the world. AT&S substrates are used in high performance computing, cloud data centers and supercomputers. These systems need components that can carry large amounts of data and power while keeping increasingly complex processors working reliably.

AT&S reported revenue of 846 million euros for the first half of its current financial year, an increase of 6 percent from a year earlier. Management expects roughly 1.7 billion euros in sales for the full year and growth above 23 percent in the following financial year, supported by continued spending on AI infrastructure.

Kulim is central to that forecast. Production has reached series output for a flagship customer in data center processors, meaning the factory has moved into regular manufacturing for that customer. The site has earned certification for manufacturing at high volumes and is adding equipment and shifts to meet delivery schedules.

How the Malaysian build has progressed

AT&S is bringing capacity into operation in stages while planning the next parts of its Malaysian investment. Its first plant and the wider campus focus on advanced IC substrates for next generation microchips used in servers, data centers and other systems with heavy AI workloads.

• January 2024: AT&S officially opened its first Kulim plant.
• May 2025: The company opened a campus worth about 5 billion ringgit at Kulim Hi Tech Park.
• By November 19, 2025: The first Malaysian factory had reached full capacity, with further phases being planned and another 500 million euros earmarked.
• March 31, 2028: The deadline for an annual greenhouse gas emissions reduction target attached to its sustainability linked financing.

The Kulim investment includes a large cleanroom footprint, roughly a quarter million square meters of gross floor area and about 500 advanced machines. Cleanrooms provide the controlled environment needed to make intricate electronic components, where small imperfections can affect performance.

AT&S has also invested heavily in local research and development and works with Malaysian institutions to build skills specific to substrate fabrication. Its longer term ambition is to become one of the world's top three substrate manufacturers.

The company intends to keep Kulim closely connected with its sites in Chongqing and Leoben. Those locations share knowledge about tools and engineering, allowing experience gained at one factory to support production at another. No opening dates were given for the additional Malaysian phases.

Why an AI chip needs a substrate

An IC substrate sits between a silicon die, the piece of silicon containing the chip's circuitry, and a printed circuit board. It acts like a dense network of roads carrying power and data into and out of the chip.

Inside the substrate, multiple layers contain extremely thin copper traces and tiny connections called vias. These connections let electrical signals pass between layers. They must be etched with great precision, while advanced resin systems and glass fiber cores provide the stiffness and electrical performance required by fast processors.

AI servers use graphics processing units and specialized accelerators to handle large computing workloads. Many designs move huge amounts of data between chiplets, smaller chip components combined into a larger package, and stacks of memory. Their substrates need very fine lines, tight manufacturing tolerances and stability as temperatures change.

AT&S operates in a field where achieving good manufacturing yields is difficult. Yield describes how much production meets the required standard. The learning process is demanding, and only a small group of manufacturers can consistently make these complex products at scale.

Data center operators buying hundreds of thousands of accelerators depend on a working substrate in every module. A shortage of suitable substrates can therefore slow the wider AI supply chain, even when other parts are ready.

Chiplet designs and advanced packaging increase the substrate's responsibilities. It helps preserve signal quality, handle sudden changes in power demand and route connections to high bandwidth memory, which supplies data rapidly to processors. Small flaws can reduce performance or cause a device to fail. These requirements help explain why AI orders have filled capacity so quickly at manufacturers such as AT&S.

Company leaders put AI at the center of growth

Ingolf Schroeder, executive vice president of the microelectronics business unit at AT&S, described the start of series production in Kulim as a milestone for the company and Malaysia.

Starting high volume production is not only a milestone for AT&S but also an important step for Malaysia.

Schroeder said Kulim would be a main contributor to growth. The team also intends to broaden its customer base beyond its initial anchor account in the near term, giving the expanding factory more customers to serve.

Schroeder linked his confidence to AI demand and the difficulty of manufacturing the products made in Kulim.

If you believe AI will be the driving force, there will not be a downturn. The products we manufacture here are top tier, robust and resilient. There is competition, but very few can produce these next generation products because of their complexity.

AT&S has long argued that demand for high performance computing will last beyond the traditional chip cycle, in which periods of strong buying can be followed by weaker orders. Its focus on data centers and AI matches the expansion of large language models and cloud computing clusters used to train them.

Management's expectation of growth above 23 percent in the next financial year rests on that continued investment. The new capacity in Kulim gives the company more production capability to serve it.

Malaysia's chip cluster attracts a wider wave of investment

Malaysia is the world's sixth largest semiconductor exporter and packages a sizable share of chips designed in the United States. Penang and Kulim anchor a concentration of international companies, local businesses, training centers and logistics providers.

That concentration gives new arrivals access to suppliers, workers and services already familiar with semiconductor production. Sharing an established industrial base can lower costs and help factories increase output more quickly.

Malaysia's appeal also reflects decades of experience in chip assembly and testing, policies that welcome investment and an English speaking workforce. Companies spreading production across more locations after the pandemic, and amid friction between the United States and China, have increasingly looked to the country.

Intel is building what it describes as its first overseas facility for advanced three dimensional chip packaging in Malaysia. Infineon has committed billions of dollars to power semiconductor capacity. A large AI cloud and supercomputing center is also being developed with leading partners, while major cloud providers are expanding data centers.

Those projects connect different parts of the same computing supply chain. More data center capacity increases demand for powerful processors and the substrates carrying them, while investment in packaging supports the assembly of increasingly complex chips.

Malaysia has launched a national semiconductor strategy and established a dedicated AI office. The policy push seeks to move the country into activities with greater technical and economic value, including chip manufacturing, design and advanced packaging.

Foreign direct investment in digital industries and electronics has supported jobs and infrastructure in northern Malaysia. Utilities, transport connections and green energy capacity are being upgraded for factories operating around the clock and using highly automated production lines. Once equipment and skilled workers are in place, that industrial base can help complex products such as IC substrates reach larger production volumes in months rather than years.

Tariffs depend on where the products go

AT&S says the direct effect of new US tariffs has so far been limited. Its Malaysian substrates mainly go to outsourced assembly and testing providers in Asia, companies that assemble chip packages and check that they work.

The substrates are not classified as finished semiconductor products under the relevant tariff codes, and current product routes do not require direct shipment to the United States. Those routes reduce the Malaysian operation's exposure to changes in US import duties.

Yap Suan See, senior vice president and managing director at AT&S in Malaysia, said the company was watching policy changes while continuing to supply customers through its existing routes in Asia.

We are, from today's perspective, not affected. We are not making and supplying the finished products.

AT&S also follows a China for China approach, serving Chinese customers from its factories in Shanghai and Chongqing. Producing within that market helps protect those operations from swings in policies affecting trade across borders.

Some industry companies are building facilities in the United States, including Arizona. Tariff exposure could change if downstream customers eventually request direct shipments there. For now, AT&S reports limited effects on Malaysian operations and continues adding capacity for assembly hubs in the region.

The company is also trying to source more inputs within Malaysia, including critical chemicals. A larger local supply base would make it easier to maintain production when international supply routes face disruption.

A loan links expansion to an emissions target

AT&S has signed a sustainability linked loan agreement with the International Finance Corporation, or IFC, for 250 million US dollars. The arrangement includes an option for another 150 million US dollars from local banks on the same terms.

The financing connects borrowing to environmental objectives. One target requires AT&S to reduce annual greenhouse gas emissions by 31 percent by March 31, 2028, compared with its 2022 financial year baseline. The baseline is the starting level against which the reduction will be measured.

Petra Preining, chief financial officer of AT&S, said the financing supports both the Kulim expansion and the company's environmental plans as initial shipments of advanced substrates reach data center processor customers.

IFC's support helps us expand in Kulim while we deliver the first waves of high end IC substrates for data center processors. The loan's sustainability targets are aligned with our plan to lower emissions as we scale.

Kulim's new production lines include advanced recycling systems and an energy concept designed around sustainability. The company is investing in cleaner energy, heat recovery and chemical recycling, measures that can reduce operating costs over time while meeting the environmental expectations of large customers.

Company leaders say environmental performance has become a qualification for supply agreements lasting many years with major chip manufacturers and cloud providers. As AI computing expands, the electricity and water used by factories and computing infrastructure are attracting closer attention.

Skilled workers are the main challenge

AT&S executives identify talent as their leading challenge in Malaysia. The country has extensive experience in assembly and testing, but advanced substrates need a wider pool of process engineers, materials scientists and equipment specialists.

The company currently employs about 2,100 people in Malaysia and expects recruitment to increase as new tools are qualified for production. Early plans for the first phase of the Kulim campus envisaged several thousand jobs once the site matures.

AT&S is working with local institutions, including groups led by industry, to adapt courses for substrate engineering and process control. The aim is to help graduates enter production and engineering jobs more quickly with skills relevant to the factory.

Internships, apprenticeships and technology transfer programs expose students to the practical demands of substrate manufacturing. AT&S wants to build expertise that is scarce around the world and establish that knowledge in northern Malaysia.

Officials have proposed allowing more foreign graduates to work locally to help close immediate skills gaps. Over time, a stronger Malaysian supplier base for materials and services could increase local content and shorten waiting times for maintenance and spare parts.

The national semiconductor strategy supports a move from backend services, such as assembly and testing, toward advanced packaging and design. Partnerships with global providers of intellectual property and chip designers are intended to develop local capabilities in chips focused on AI. For AT&S, these efforts matter because expansion depends on both trained workers and capable local partners.

Orders must be matched by production capacity

AI is driving the current semiconductor upswing. Sales of data center graphics processors and computing clusters used for training are at record levels and show few signs of slowing. Industry data points to strong growth in logic chips and memory as cloud providers expand capacity for new AI models and for inference, the process of using a trained model to produce an answer or prediction.

Substrates remain a potential constraint because advanced packaging and chiplet designs require more layers, finer lines and greater reliability. These demands support AT&S's revenue expectations, while also increasing the difficulty of adding usable production capacity.

Malaysia's expansion will depend on power, water and logistics keeping pace with manufacturing. Investors are also watching how quickly local suppliers of chemicals and materials can grow to support continuous factory operations.

AT&S combines new lines in Kulim with its connected manufacturing network in Austria and China. Its customer pipeline begins with a major designer of data center chips, while plans to broaden that customer base give the Malaysian operation another route to growth.

Continued growth in AI workloads would keep pressure on the supply of advanced substrates and strengthen Malaysia's role in producing them. The immediate task is to turn additional equipment, financing, recruitment and supplier development into dependable output.

Key Points

• AT&S's first Kulim factory has reached full capacity, and further expansion phases are being planned.
• The company opened its first Malaysian plant in January 2024 and a campus worth about 5 billion ringgit in May 2025.
• Investment in Malaysian facilities and operations exceeds 1.2 billion euros, with another 500 million euros earmarked.
• Kulim makes IC substrates for advanced processors used in AI systems, cloud data centers and supercomputers.
• First half revenue reached 846 million euros, up 6 percent. Management expects about 1.7 billion euros for the full year and growth above 23 percent in the next financial year.
• Current shipments mainly go to assembly and testing providers in Asia, limiting direct exposure to US tariffs.
• A 250 million US dollar IFC loan includes an option for another 150 million US dollars from local banks and an emissions reduction target of 31 percent by March 31, 2028.
• AT&S employs about 2,100 people in Malaysia. Skills development, local suppliers and infrastructure are priorities for further growth.