Malaysia’s semiconductor industry, facing potential U.S. tariffs, is crucial to the global supply chain, contributing 13% to the market. The country aims for $115 billion in investments by 2030, but tariffs could hurt exports. Penang’s Chief Minister highlights the impact on both American and Malaysian workers, while the industry hopes for fair tariff implementation. Despite concerns, exports to the U.S. saw significant growth, showcasing strong trade relations.
Malaysia’s semiconductor industry, the sixth largest globally, is facing uncertainty due to potential tariffs proposed by U.S. President Donald Trump. The country accounts for 13% of the global semiconductor assembly, testing, and packaging market and aims to attract $115 billion in investments by 2030. Tariff concerns could jeopardize exports and new investments, particularly affecting its semiconductor sector.
Trump threatened a universal tariff of up to 20% on imports from all countries, despite recent tariffs on Canada, Mexico, and China being enforced. A 25% tariff is currently applied to goods from Canada and Mexico, while China faces an additional 10% duty, totaling a 20% tariff. These measures are tied to issues surrounding the opioid epidemic in the U.S.
Penang’s Chief Minister Chow Kon Yeow expressed that heightened tariffs would adversely impact American firms and Malaysian workers in the semiconductor industry. Known as the “Silicon Valley of the East,” Penang attracts significant investments from major tech companies, including Intel and Texas Instruments, beneficially contributing to the local economy.
Chow emphasized the importance of recognizing the impacts of tariff policies on American employees as well. He also advocates for an ASEAN-U.S. summit to mitigate the effects of proposed tariffs on Malaysia’s semiconductor industry. Industry leaders hope tariffs will be fairly enacted to maintain competitiveness globally.
Malaysia anticipates that tariffs could significantly hinder trade growth with the U.S., particularly affecting its semiconductor exports, which are vital for economic stability. Despite these worries, exports to the U.S. increased by 28% in January, while imports rose by nearly 30%, signaling robust trade relations despite looming tariff threats.
As a tier 2 country, Malaysia is perceived as having a low risk of diverting advanced AI chips to banned nations, which positions it favorably in the semiconductor market. Industry representatives are proactively engaging with the U.S. to ensure compliance with regulations established by the Bureau of Industry and Security.
To maintain advancement, Malaysia is focusing on moving up the semiconductor value chain by promoting integrated circuit design. Experts underscore the necessity for government collaboration with industry players to foster local champions and address workforce challenges, including brain drain.
Investment in competitive salaries and comprehensive training programs is essential to attract talent. The industry must pivot towards AI technologies to capture larger segments of the global supply chain, enhancing resilience in the Malaysian semiconductor sector. Collaborations with global headquarters are crucial to ensure competitive compensation for skilled workers, fostering industry growth.
The semiconductor industry in Malaysia is at a critical juncture as it navigates the uncertainties posed by potential U.S. tariffs. With a commitment to advancing within the global supply chain, Malaysia aims to promote integrated circuit design while addressing challenges in workforce retention and competitive compensation. The collaborative efforts between the government and industry stakeholders will be pivotal in sustaining Malaysia’s position and growth in this vital sector.
Original Source: www.channelnewsasia.com
