KUALA LUMPUR — Malaysia’s semiconductor industry stands to benefit from the impact of the United States’ (US) restrictions on China, said Malaysia Semiconductor Industry Association (MSIA) president Datuk Wong Siew Hai.
This is as US companies, now curbed from purchasing from and shipping to China, need alternative solutions, he said at the China Conference Southeast Asia here today, Bernama reports
“This is where the China Plus One strategy comes into play,” Wong said, referring to the strategy companies have adopted to diversify operations by expanding their supply chains at least one other country, rather than relying heavily on China for manufacturing.
“As a result, many products that were previously manufactured in China for global markets have been relocated to Malaysia.
“Similarly, restrictions on semiconductor equipment have created supply chain gaps, which Malaysia has been able to fill,” he added.
Supply chain components previously sourced from China that are now restricted, creates opportunities for Malaysia to develop those capabilities domestically, Wong said.
“Additionally, companies are increasingly seeking to mitigate risks by establishing operations in neutral, non-aligned countries.
“Malaysia fits this profile well, making it an attractive destination for businesses looking to serve not only the US and China but also the rest of the world,” Wong said.
China and the US are now in a tit-for-tat war after US President Donald Trump imposed 10% tariffs on all Chinese products earlier this month.
Beijing retaliated immediately, announcing 15% border tax on imports of US coal and liquefied natural gas products, 10% tariff on American crude oil, agricultural machinery and large-engine cars. China also imposed export controls on 25 rare metals, some of which are necessary in the making of electrical products and military equipment.
Early last year, Malaysia had already recognised its advantage from competition between US and China, with Deputy Minister of Investment, Trade and Industry, Liew Chin Tong, urging Malaysia to seize this “golden opportunity” to expand its semiconductor industry.
“Malaysia can become a high-value-added semiconductor producer with activities along the value chain, such as integrated circuit design, wafer fabrication, assembly, and testing, as well as technical marketing,” Liew said in Parliament in March 2024.
Many companies have selected Malaysia as a new location for their production facilities,, he also noted, as there was already a mature semiconductor industry ecosystem here, in Penang and Kulim, Kedah.
Technological rivals between the US and China has shown that “semiconductors are the new oil”, Liew also said, and the competition has led multinational semiconductor companies to build a second supply chain instead of having one base in only one country. – February 17, 2025