Malaysia’s semiconductor industry faces potential US tariffs that might affect exports and investments. Despite uncertainties, the country remains a key player, being the sixth-largest exporter globally. Industry leaders advocate for fair tariffs and emphasize the need to enhance local capabilities through innovation and wage competitiveness to counteract challenges posed by international trade dynamics.
Malaysia’s semiconductor industry is currently facing challenges as it braces for potential tariffs from the United States. Known as the sixth-largest exporter globally, Malaysia contributes 13 percent of the semiconductor assembly, testing, and packaging market, with ambitions to attract US$115 billion in investments by 2030. However, uncertainty looms due to US President Donald Trump’s threats of imposing tariffs on imports, particularly those affecting chips, which could impact the country’s export capabilities and deter future investments.
Despite the lack of recent implementation of the threatened 20 percent universal tariffs, President Trump has already enacted tariffs on imports from major trading partners, including Canada, Mexico, and China. This has raised concerns within Malaysia regarding how similar tariffs could affect its semiconductor sector, as these measures were justified by the US administration as necessary to combat the opioid crisis.
In Penang, a pivotal hub for semiconductor manufacturing in Malaysia, Chief Minister Chow Kon Yeow has emphasized that any tariff increases would be detrimental, impacting American firms and local employees alike. Penang has attracted significant investments from leading technology companies and is recognized as a critical player in the global semiconductor arena. Chow expressed hope that an ASEAN-US summit can facilitate discussions aimed at minimizing the tariffs’ repercussions on Malaysia’s industry.
Industry stakeholders are hopeful that any tariffs imposed will maintain fairness and foster competition. Wong Siew Hai, president of the Malaysia Semiconductor Industry Association, noted that even across-the-board tariffs could level the competitive landscape. However, disparities in tariff rates across different countries could create significant advantages or disadvantages for Malaysia.
Despite potential tariff instabilities, Malaysia’s exports to the US saw a significant increase of 28 percent in January, highlighting ongoing trade growth. The government anticipates that US tariffs may curb this positive trend, particularly affecting crucial semiconductor exports and concern for economic stability. Malaysia’s low-risk classification in terms of exporting advanced AI chips aids its standing among other ASEAN nations.
To navigate these obstacles, Malaysia is prioritizing advancements in integrated circuit design to enhance its position within the semiconductor supply chain. Experts advocate for a robust partnership between government and industry to cultivate local champions and address talent retention in the sector. There is a mutual recognition of the need for more competitive wages to attract and retain skilled workers, while also emphasizing the importance of innovation and specialization.
In summary, Malaysia’s semiconductor industry is at a critical juncture, contending with the potential impact of US tariffs while striving to expand its global footprint. The optimistic growth in exports to the US, coupled with proactive strategies to enhance local capabilities, reflects a firm commitment to evolving within the semiconductor supply chain. Building solid government and industry collaboration is essential for sustaining competitiveness and fostering resilience against external economic pressures.
Original Source: www.channelnewsasia.com
