Kuala Lumpur, March 20 -- Though Malaysia is making great strides in its effort to become a major player in the global semiconductor industry, analysts warn that the country still faces tough challenges and obstacles.

Experts said internal constraints such as a talent crunch, funding problems, and other supply chain gaps are key hurdles the country must overcome if it wants to compete with top industry giants such as Taiwan (China), the Republic of Korea (RoK), and Japan.

Shafiq Kadir, an equity analyst at CGS International, said local integrated circuit (IC) design houses face challenges in accessing large-scale funding, and lack a pool of experienced engineers.

One of the main reasons is that the country's higher education system is no...