In Malaysia’s Penang State, a cluster of tech manufacturing facilities operated by major companies like Intel, AMD, and HP has been a significant contributor to the local economy for over five decades. This industrial hub, reminiscent of Silicon Valley, has created tens of thousands of jobs and become a vital part of the global tech manufacturing supply chain, with Malaysia emerging as one of the largest semiconductor exporters to the United States.
The partnership between American companies and Malaysia has been lucrative, with billions of dollars’ worth of components used in various products, from laptops and phones to cars, toys, and medical devices, being shipped to the US. However, Malaysia now finds itself caught in the crossfire of President Trump’s tariffs and trade policies, which have introduced uncertainty into the industry.
Prime Minister Anwar Ibrahim acknowledged Malaysia’s heavy reliance on the US for trade and investment during a press conference in Kuala Lumpur. He emphasized the need for countries to make their own decisions rather than being dictated to by Washington, particularly in the context of the ongoing US-China trade war.
Until recently, Malaysia was seen as a potential beneficiary of the US’s efforts to restrict China’s access to advanced AI chips. The country had been considered an attractive alternative for companies seeking to insulate themselves from the intensifying US-China rivalry. This optimism had led Prime Minister Anwar to unveil an ambitious plan last year to position Malaysia at the forefront of high-tech chip manufacturing, including AI chips, through a decadelong, multibillion-dollar initiative.
However, the chaotic nature of Mr. Trump’s trade policy has cast a shadow over these plans. The imposition of a 24 percent levy on all Malaysian exports to the US last month, which was later put on hold, and the ongoing negotiations between the two countries have created an air of uncertainty. Currently, all Malaysian goods are subject to a baseline 10 percent tariff imposed by Mr. Trump.
As the situation continues to unfold, the future of Malaysia’s thriving tech industry hangs in the balance, with the potential for significant implications for both the local economy and the global tech manufacturing landscape.
