Asia's Industrial Upgrade Amidst Trump's Tariffs: A Rare Opportunity

Asia's industrial upgrade is seen as an opportunity due to US President Trump's tariffs. Malaysia has announced a $250 million deal with Arm Holdings, a chip technology provider. Senior economist Takashi Onoda believes this and other deals can help drive Asia's industrial upgrade.

Asia's industrial landscape is undergoing a significant transformation, driven in part by the impact of U.S. President Donald Trump's tariffs. The tariffs, which have disrupted global trade dynamics, are pushing Asian nations to accelerate their industrial upgrade and diversify their supply chains. Malaysia, in particular, has seized this opportunity with a strategic partnership that could catalyze the region's industrial evolution.

In a move to bolster its semiconductor industry, Malaysia has announced a $250 million deal with Arm Holdings, a leading chip technology provider. The agreement, signed in March 2025, aims to enable Malaysia to produce its own chips within the next decade. This deal aligns with Malaysia's National Semiconductor Strategy (NSS), which seeks to transform the country into a global semiconductor hub by 2030 [2].

The NSS, launched in 2024, has already attracted significant investments, with RM54.2 billion (USD12.8 billion) secured in its first year alone. The strategy is designed to move Malaysia beyond its traditional role in assembly and testing, encouraging higher-value activities such as advanced test development and process automation. This shift is evident in the confidence expressed by local small and medium enterprises (SMEs) like CG Global Profastex, which plans to scale up production capacities and adopt digital tools to strengthen Malaysia's position within the ASEAN semiconductor landscape [2].

The broader implications of these developments are far-reaching. Malaysia's semiconductor ambitions are part of a larger regional trend, driven by the country's role as ASEAN chair. In the first half of 2025, Malaysia secured RM190.3 billion (USD45.2 billion) in approved investments, an 18.7% increase over the same period last year. This investment momentum reflects strong cross-border confidence in Malaysia's trajectory and underscores the region's commitment to advancing its industrial capabilities [2].

The strategic partnership with Arm Holdings is not an isolated event. It is part of a broader effort to create a stable microchip supply chain in Southeast Asia, particularly in response to the escalating US-China trade war. The region's semiconductor market was valued at US$95.91 billion in 2024, accounting for 15% of the global market. The newly-launched Johor-Singapore Special Economic Zone (JS-SEZ) further enhances this potential, combining Singapore's upstream excellence and Malaysia's outsourced semiconductor assembly and test (OSAT) strength [2].

Senior economist Takashi Onoda believes that these deals and the broader NSS can help drive Asia's industrial upgrade. "The strategic partnerships and investments in the semiconductor sector are not just about technology; they are about creating a resilient and diversified supply chain that can withstand global disruptions," he said. "This is a significant opportunity for Asia to assert its industrial leadership and create new economic opportunities."

The impact of Trump's tariffs on global trade dynamics is undeniable. While they have caused disruptions and uncertainties, they have also forced Asian nations to innovate and adapt. The deals and strategies being implemented in Malaysia and other parts of Asia are a testament to this adaptive capability. As the global trade landscape continues to evolve, these initiatives could shape the future of industrial development in the region.

References:
[1] https://walletinvestor.com/magazine/trump-tariffs-put-pressure-on-india-europe-chemicals-while-treasury-yields-rise
[2] https://laotiantimes.com/2025/09/03/malaysias-asean-chairmanship-supercharges-nss-in-global-chip-race/