To determine how well-equipped they are to handle the possible effects of U.S tariffs on chip exports Malaysia is now in talks with domestic semiconductor companies. Import taxes of up to 25% on semiconductors have been suggested by the US which might have a big impact on Malaysia export-based economy, Malaysia is a significant exporter of chips to the United States; in 2024, its $16.2 billion worth of exports represented almost 20% of all U.S. semiconductor imports.
Major U.S companies like Intel and worldwide Foundries operate in Malaysia, which is the sixth-largest exporter of semiconductors in the world and plays a vital part in the worldwide supply chain, semiconductor industry also contributes significantly to the country economy. Malaysia continues to draw investments in the semiconductor industry with the goal of becoming a more significant player in the global market, despite the difficulties caused by U.S tariffs.
United States proposed tariffs may raise the price of Malaysian semiconductor exports, with no imminent plans for government subsidies, Trade Minister Tengku Zafrul Aziz stated that these costs will probably be covered by either consumers or businesses themselves. This tactic illustrates Malaysian plan to navigate the uncertainty of U.S trade policies while preserving its competitive edge in the semiconductor market.
United States' ban on chip exports has little effect on Malaysia's thriving data center industry. This sector of the economy is expanding quickly in the nation thanks to investments from big tech firms like Amazon, Google and Microsoft, with a compound annual growth rate CAGR of 21.41% from 2025 to 2030, the data center market in Malaysia is expected to expand rapidly and generate USD 1,873.2 million in sales by that time. Notwithstanding U.S. export limitations on advanced processors this expansion is bolstered by developments in artificial intelligence and cloud services, which continue to fuel demand for data centers.
Malaysia is looking into ways to diversify its semiconductor industry while navigating the difficulties brought on by US tariffs, in an effort to lessen reliance on American technology, the government has inked a memorandum of understanding with Arm Limited to create a domestic chip ecosystem, furthermore Malaysia is a desirable location for international investment in the semiconductor and data center industries due to its advantageous business climate and strategic location.
