US-Malaysia Nuclear Cooperation: Pioneering SMR Opportunities in Asia's Energy Transition

The United States and Malaysia have entered a new era of strategic collaboration, anchored by a landmark Memorandum of Understanding (MoU) signed in July 2025. This agreement marks a pivotal shift toward advancing small modular reactor (SMR) technology, positioning both nations as pioneers in Asia's energy transition. With Malaysia's ambitious goal to transition to nuclear power by 2035 and the U.S.'s leadership in SMR innovation, the partnership presents a compelling investment thesis in a sector poised for exponential growth.

Strategic Context: A Foundation for Energy Security

Malaysia's energy landscape is undergoing a transformative shift. As a nation reliant on fossil fuels for 80% of its electricity generation, it faces dual challenges: reducing carbon emissions and meeting rising demand. The MoU with the U.S. aligns with Malaysia's National Energy Policy 2023, which prioritizes nuclear energy as a cornerstone of its energy mix. The agreement also paves the way for negotiations on a Section 123 Agreement—a critical U.S. legal framework enabling nuclear cooperation—thereby unlocking access to advanced SMR technologies.

The geopolitical significance of this partnership cannot be understated. The U.S. views Malaysia as a strategic ally in countering China's influence in Southeast Asia, while Malaysia gains a trusted partner to navigate the complexities of nuclear infrastructure development. U.S. Secretary of State Marco Rubio emphasized the deal's dual purpose: fostering energy resilience and setting a global standard for non-proliferation and safety.

Market Potential: Asia-Pacific's SMR Boom

The SMR market is on the cusp of a boom, driven by its scalability, lower capital costs, and alignment with decarbonization goals. Global projections indicate the market will grow from $6.88 billion in 2024 to $16.13 billion by 2034, expanding at an 8.9% CAGR (). The Asia-Pacific region, accounting for 80% of global SMR activity, is the epicenter of this growth, with Malaysia poised to capitalize on its strategic location and regulatory modernization efforts.

Malaysia's potential is amplified by its "Potentially ready by 2030" classification by the IAEA and its focus on public-private partnerships. The government's commitment to investing in nuclear infrastructure—coupled with U.S. technical expertise—positions SMRs as a viable solution for powering industrial hubs, desalination plants, and remote communities.

Key Players and Investment Opportunities

The U.S.-Malaysia partnership will hinge on collaboration between global SMR pioneers and local stakeholders:

1. NuScale Power (NUS): A U.S. leader in SMR design, NuScale's 60-MW modules are nearing NRC certification. Its partnership with Malaysia could unlock projects in industrial zones like Port Klang. .
2. Westinghouse Electric: As a subsidiary of Brookfield Business Partners (BAM), Westinghouse's expertise in light-water reactors positions it to support Malaysia's grid integration needs.
3. Rolls-Royce SMR: While UK-focused, its modular designs could be adapted for Southeast Asia, leveraging Malaysia's FDI ties with the U.S.

Investors should also monitor Malaysia-based firms like Tenaga Nasional Berhad (TNB), the national utility, which is likely to lead SMR procurement and grid management.

Challenges and Mitigation Strategies

Despite the optimism, hurdles remain:
- Regulatory Hurdles: Malaysia's Atomic Energy Licensing Act must evolve to address SMR-specific standards. The MoU's emphasis on IAEA alignment mitigates this risk.
- Public Perception: Malaysia's 2023 public survey found 68% support for nuclear energy, higher than many Western nations, easing adoption barriers.
- Capital Costs: SMRs require upfront investment, but their modularity allows phased deployment, reducing financial risk.

Strategic Investment Recommendations

1. SMR Technology Leaders:
2. NuScale (NUS): A pure-play SMR stock with U.S. government backing.

3. Brookfield Business Partners (BAM): For exposure to Westinghouse's nuclear portfolio.

4. Infrastructure Plays:

5. Tenaga Nasional Berhad (TNB): Malaysia's grid operator will manage SMR integration.

6. Regional ETFs:

7. iShares MSCI Malaysia ETF (EWM): Tracks Malaysia's equity market, benefiting from energy sector growth.

8. Geopolitical Play:

9. U.S. companies with ASEAN partnerships, such as General Electric (GE) (via Hitachi GE Nuclear Energy), stand to gain from regional SMR deployments.

Conclusion: A Blueprint for Energy Dominance

The U.S.-Malaysia SMR partnership is more than a bilateral deal—it's a template for global decarbonization. With Malaysia's strategic location, regulatory momentum, and the U.S.'s technological prowess, this alliance could catalyze a wave of SMR projects across Southeast Asia. Investors who position themselves in SMR innovation and infrastructure stand to benefit from a market primed for explosive growth. As the world transitions to cleaner energy, SMRs are no longer a niche concept—they're the future's backbone.