Chip firms in Malaysia are holding back on investment and expansion as they await clarity on tariffs from the US, according to Malaysia Semiconductor Industry Association President Datuk Seri Wong Siew Hai.
The companies are hoping that the US government would continue to exempt semiconductors from tariffs beyond Aug. 1, the deadline for higher levies announced by President Donald Trump, Wong said in an interview with Bloomberg TV’s Haslinda Amin.
"That situation, if it’s clear, then I think investments will continue,” he said. "Everyone is waiting to see how it all plays out.”
Trump has said he is weighing further tariffs on select industries, including semiconductors. On Monday he announced that Malaysia could see a 25% levy - "separate from sectoral tariffs” - on Aug. 1, unless it reaches an agreement with his administration. The nation was initially hit with a 24% levy in April before the US announced a 90-day pause, which moved the level to 10% on goods to facilitate talks.
The US is Malaysia’s third-largest market for semiconductor exports. Malaysia packages roughly a tenth of the world’s semiconductors, while about two-fifths of exports are made up of electric and electronic products.
Wong said the industry is already seeing a slight increase in the cost of doing business after Malaysia expanded its sales and service tax from July 1, with some firms seeing a bigger impact than others. While he was unable to quantify the impact, he said it was something that companies would have to live with.
"Malaysian companies will have to double up on their productivity improvement through AI, through automation, robotics and become globally competitive,” he said.
The Southeast Asian nation last year pledged at least 25 billion ringgit ($5.9 billion) to support its semiconductor industry, seeking to increase its role as tensions between the US and China shake up global supply chains. The industry aims to double its exports to 1.2 trillion ringgit by 2030, cementing its position as the sixth-largest chip exporter in the world.
Malaysia hosts a number of chip-packaging facilities for Intel Corp., GlobalFoundries Inc. and Infineon Technologies AG, making it a key regional hub in the global supply chain. - Bloomberg
