Malaysia Chip Firms Pause Expansion Amid US Tariff Uncertainty

Leading chip manufacturers in Malaysia have put their investment and expansion plans on hold as they wait for the U.S. to clarify its impending tariffs. The uncertainty surrounding the tariffs has created a challenging environment for Malaysian chip firms, with the U.S. being Malaysia’s third-largest buyer for chip exports. The Southeast Asian nation is responsible for packaging nearly 10% of the world’s semiconductors, and around 40% of its exports are electrical and electronic products. In 2024, the country sold over 575.45 billion ringgit-worth of semiconductors, equal to about $135 billion.

Malaysia Semiconductor Industry Association President Wong Siew Hai stated that the chip companies wish the U.S. government would maintain tariff exemptions for semiconductors past the August 1 deadline. He added, “That situation, if it’s clear, then I think investments will continue,” he said. “Everyone is waiting to see how it all plays out.”

On Monday, President Trump warned he could impose a 25% levy on Malaysia, aside from sector-specific levies, starting August 1, unless the two countries agree. Before, the U.S. government had slapped a 24% tariff on the country in April, but later introduced a 90-day pause, which brought down the levies to 10%.

While the country is doing fairly well, Wong believes companies must ramp up productivity through AI, automation, and robotics to remain “globally competitive.” Last year, Malaysia committed at least 25 billion ringgit, roughly $5.9 billion, to grow its semiconductor industry. The country hopes to raise its exports to 1.2 trillion ringgit, about $282 billion, by 2030, though Wong argued that they’ll need a workforce of at least 300,000 people to achieve the target. The country still faces a shortage of skilled workers and is turning to international recruitment to meet demand.

Meanwhile, the country is now home to multiple chip-packaging facilities for Intel Corp., GlobalFoundries Inc., and Infineon Technologies AG. The nation is also encouraging Chinese companies to build data centers as part of its strategy to boost high-quality foreign investment.