Malaysia’s Semiconductor Industry Remains Vigilant Amid US Tariff Concerns

Malaysia’s semiconductor firms, though currently exempt from US tariffs, remain apprehensive about possible future trade actions. The industry is closely monitoring developments while US-based companies in Malaysia are also at risk. Negotiations with the US regarding tariffs are set to begin as leaders express concerns over indirect impacts on semiconductor products.

Malaysia’s semiconductor industry has received a temporary reprieve from the latest United States tariffs; however, concerns linger about potential future actions from the US. Datuk Wong Siew Hai, the president of the Malaysia Semiconductor Industry Association, cautioned that local semiconductor firms might still face targeted tariffs. He emphasized that American companies operating within Malaysia would also be susceptible to such risks.

In an executive order, President Donald Trump announced a 24% tariff on goods imported from Malaysia, effective April 9, as part of a broader trade initiative affecting all trading partners. Notably, semiconductors are currently exempt from this reciprocal tariff, which is significant because electrical and electronic products comprise approximately 40% of Malaysia’s total exports.

Major global semiconductor manufacturers, including Intel and Infineon Technologies, have substantial operations in Malaysia, employing a large workforce. Nonetheless, Wong indicated that semiconductors might still face an indirect impact due to their integral role in various products like computers and industrial equipment, which may be subject to tariffs. He explained that products shipped to the US could fall under the equipment tariff and subsequently be affected.

Given the unpredictable nature of trade policies under the Trump administration, the semiconductor industry in Malaysia intends to monitor the situation closely. It remains uncertain how the final decisions regarding tariffs will unfold, though Trump has expressed willingness to engage in negotiations. The Malaysian Ministry of Investment, Trade & Industry has joined efforts to negotiate with the US on these tariffs.

The Malaysian semiconductor sector is currently experiencing relief from specific US tariffs, but uncertainty prevails regarding potential future trade actions. Industry leaders express concern that both local firms and US entities might still face new tariffs, especially indirectly through equipment tariffs. As negotiations are initiated, the industry’s future remains contingent upon evolving trade policies.

Original Source: theedgemalaysia.com