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Malaysia, a key player in global semiconductor manufacturing, is seeking to move up the value chain by transitioning from assembling and testing chips to engaging in chip design and advanced manufacturing suitable for artificial intelligence applications. The nation, particularly the tech-centric region of Penang, has played host to major US firms like Intel, AMD, and HP for decades, resulting in tens of thousands of jobs and a significant role in supplying the US with semiconductors used across industries from medical devices to automobiles.
However, Malaysia’s ambitious ten-year, multibillion-dollar plan to become a high-tech chip powerhouse—akin to Taiwan—faces formidable obstacles due to trade policies under President Trump. Previously, Malaysia benefited from efforts to restrict advanced chip exports to China and was seen as a secure supply chain alternative for US tech companies. But recent tariff changes have cast doubt on this trajectory. Last month, the Trump administration imposed a sweeping 24 percent levy on all Malaysian goods exported to the US. Although that specific tariff was paused amid ongoing negotiations, a new 10 percent baseline tariff remains, creating uncertainty for Malaysia’s crucial export sector and its economic development agenda.
Prime Minister Anwar Ibrahim criticized what he sees as the US dictating terms to its trading partners and emphasized that nations like Malaysia should be allowed to pursue their own interests in global trade. As Malaysia negotiates its position amid intensifying US-China rivalry, its plans to foster an ecosystem for artificial intelligence-capable chip production remain in limbo, with the outcome closely tied to the evolving US trade stance. The situation underscores how sudden shifts in international trade policy can reshape the ambitions and fortunes of entire regions in the global technology industry.
