Evolutionary economic geography proposes regional branching as a mode of industry emergence and development. It is claimed that branching enhances performance and evolution. In this article we investigate the relevance of regional branching and this claim in the context of Southeast Asia's late-industrialization. We report research into the industrial automation industry in Penang, Malaysia. We first demonstrate that the emergence of this industry conforms well to regional branching. We show that despite this mode of genesis, industry development has stalled at an early stage and its evolution shows bifurcation: amongst the firms there are growers but alsoand substantially more -stagnators. We offer a framework for understanding regional branching in late-industrialization context and for understanding differential performance/evolution. Applying this framework to our research context we find that regional branching, stalling, and the occurrence of stagnators and only a few growers can be understood from factors and hampering/conducive circumstances at the levels of the industry, the region and individual firms.