Multinational corporat ions ( M N C s ) in Malaysia have been alternatively credited and criticized for transferring technology o f various levels o f sophistication to local firms. Recent studies o f the electronics and electrical sector ( U N D P 1994; Narayanan et al. 1994; Abibul lah et al. 1994; Rasiah 1995), the f o o d processing sector (Lai and G a n , in progress) and the plastics sector (Cheah 1994), for example , have found evidence o f substantial technology transfer, though the extent o f transfer varies in these sectors. A related area o f interest is the level or sophistication o f the techno logy be ing introduced within M N C s and the factors which determine their techno logy choice . T o date, this has not been investigated rigorously, despite its obvious po l i cy relevance. W e focus o n this issue through an examination o f the electronics and electrical (EE) sector in Penang State in north-western Peninsular Malaysia.