Shortly after a Chinese company opened up nearby, employees at Malaysian contract manufacturer Kemikon walked outside their factory to find sheets of paper stuck to their car windshields.

The flyers were from Fengshi Metal Technology, a Suzhou-based rival that operates in similar areas of semiconductor equipment manufacturing. They promised salaries 30 per cent above the market rate and other “unique opportunities” including overseas travel and free meals.

Fengshi is one in dozens of companies setting up or expanding in Penang — a state in northern Malaysia better known for its beaches, varied cuisine and laid-back atmosphere — in the past 18 months. Others include American chip giants Micron and Intel and European semiconductor companies AMS Osram and Infineon.