Malaysia’s semiconductor industry, a key global player, contends with potential U.S. tariffs under Trump’s administration. Despite threatening import taxes, Malaysia’s semiconductor exports increased, showcasing resilience. Local leaders urge for equitable tariff measures while pushing for advancements in industry capabilities and workforce development to ensure sustained growth and competitiveness.
Malaysia is experiencing growth in its semiconductor industry amidst uncertainty regarding potential tariffs from the United States. As the sixth-largest exporter globally, Malaysia secured a notable share of 13 percent of the semiconductor assembly, testing, and packaging market and is aiming to attract $115 billion in investments by 2030. However, President Trump’s prior threat of imposing up to 20 percent universal tariffs raises significant concerns about potential adverse effects on exports and new investments in Malaysia’s semiconductor sector.
The tariffs represent a prominent aspect of President Trump’s trade policies. Although he has not yet enacted universal tariffs, he has implemented a 25 percent levy on imports from Canada and Mexico, alongside an additional 10 percent duty on China, resulting in a cumulative 20 percent tariff. This trade dynamic raises anxieties regarding how such measures might impact Malaysia’s semiconductor industry and its future investments.
Chow Kon Yeow, Chief Minister of Penang, emphasized that tariff increases would not benefit anyone, including American businesses and workers in Malaysia’s semiconductor sector. He highlighted Penang’s reputation as a crucial semiconductor manufacturing hub, home to major corporations including Intel, Infineon, and Texas Instruments. Chow urged that any tariff policies should consider the impact on both American and Malaysian workers, advocating for an ASEAN-US summit to discuss these issues in a cooperative manner.
Industry professionals express optimism that any forthcoming tariffs will be equitable. Wong Siew Hai, president of the Malaysia Semiconductor Industry Association, noted that the effects of tariffs would be manageable if set uniformly across all countries. He anticipates the ramifications of a significant U.S. tariff on Malaysia, which could diminish trade growth and threaten the stability of key exports, particularly semiconductors.
Despite these concerns, statistics reveal a 28 percent increase in Malaysian exports to the U.S. in January, reaching RM17.3 billion ($38.7 billion). The anticipated expectations from the Malaysian government posit that tariffs could halve trade growth this year, especially affecting the semiconductor industry, thus raising questions about economic stability.
In response to challenges, Malaysia aims to advance within the semiconductor value chain, focusing on integrated circuit design growth. Chow indicated that such advancements could enable the nation to develop resilience. Experts like Lee Eng Keat from Lam Research are advocating for ambitious development plans while emphasizing collaboration between government and industry to stimulate growth and respond effectively to challenges within the sector.
Addressing the industry’s competitiveness, industry leaders recognize the need for enhanced wages and innovative talent development to mitigate brain drain. As pointed out by Suresh Kumar Dass from Intel, wage adjustments must be industry-wide to foster a robust semiconductor ecosystem, expressing a commitment from headquarters to ensure fair compensation for Malaysian talent.
Malaysia’s semiconductor industry faces considerable challenges due to possible U.S. tariffs which could hinder exports and investment. The success of Malaysia in enhancing its position in this sector depends on collaboration between government and industry stakeholders for development, innovation, and creating a resilient workforce. With hopes for equitable tariff policies, Malaysia continues to strive towards a more sophisticated semiconductor market in the face of uncertainty.
Original Source: www.channelnewsasia.com
