This paper examines knowledge diffusion, talent development and technology transfer in Malaysia�s electronics and electrical (EE) industry by employing a triangular model comprising the collaboration of the state, industry and the university in Penang�s Free Trade Zone. It examines the government�s policies and initiatives under the Economic Transformation Program (ETP) to rejuvenate Malaysia�s EE sector in the context of neoliberal globalisation. It explores and understands the actual transfer of tacit knowledge at ground level through three case studies which include multinational corporations and local contract manufacturers, a research university, and a newly-established non-profit knowledge institute, designated as Collaborative Research in Engineering, Science and Technology (CREST). © koninklijke brill nv, leiden, 2018