INDUSTRY figures warn Malaysia’s semiconductor industry to prepare for potential repercussions from prospective new tariffs from the United States.
The president of the Malaysia Semiconductor Industry Association, Wong Siew Hai, said while the specifics of any new tariffs remained unclear, any announcement from Washington would have some degree of consequence for Malaysia, adding that it was “just a matter of more or less.”
The Star reported that on April 13, US President Donald Trump had indicated his intention to announce tariffs on imported semiconductors, while suggesting there would be flexibility for certain companies within the sector.
Wong pointed out that Malaysia had already begun to benefit from the “China Plus One” strategy, where companies diversify their manufacturing away from China, even before the recent escalation in tariff tensions.
He asserted that Malaysia’s position as a neutral and non-aligned nation made it a natural choice and that the country was prepared to assume a larger role in the global semiconductor supply chain.
However, The Star quoted Wong as cautioning that despite Malaysia currently benefiting from a more favourable tariff rate, even a 24 percent rate was considered high.
On April 2, Trump had announced reciprocal tariffs for countries globally, including Malaysia, which faced a 24 percent tariff. It further reported that on April 9, he had announced a 90-day pause for countries affected by the higher tariffs.
The Trump administration had exempted smartphones, computers, and other electronics from its reciprocal tariffs.
According to Wong, with the potential for supply chains to be affected, Malaysian companies needed to be ready to respond proactively.
He explained that if the final product was assembled in the United States but components originated elsewhere, tariffs might apply depending on the source of the parts.
“We need to study the supply chain thoroughly to see where we might be affected,” he reportedly said.
Wong calls for the swift implementation of industry upgrades and for local companies to move up the value chain.
“Accelerating value creation within the supply chain is key. That’s how we stay competitive—by going higher in value, not just bigger in volume,” he was quoted as saying.
Meanwhile, economist Geoffrey Williams is of the opinion that the current situation placed the United States in a negotiating position to encourage countries, including Malaysia, to be flexible across all sectors or risk being targeted on semiconductors.
He said local semiconductor suppliers should consider the implications of new tariffs but avoid overreacting.
“It is imperative that the Malaysian government is flexible on removing barriers to trade across the board to avoid targeted tariffs on Malaysia’s semiconductor companies,” he reportedly stated.
Williams said that Trump’s announcement of a 90-day pause on reciprocal tariffs and an exemption for electrical and electronic products demonstrated a willingness on the part of the United States to be flexible.
He said that it was too early to consider shifting production bases for such a highly complex industry, as it would be very costly, and even with tariffs, it is likely that Malaysia can compete on quality and price.
An equity analyst at CGS International, Shafiq Kadir, told The Star that the impact of the tariffs on semiconductors would likely be minimal, as relocating such an extensive back-end process to the United States was a significant undertaking.
“It will take years to pull in investments and integrate the back-end production to the existing supply chain,” he reportedly said.
On whether the move could place Malaysia in a more advantageous position compared to China, he acknowledged a possibility given the difference in tariffs.
He said, Malaysia’s established semiconductor ecosystem is also a key advantage that should attract foreign direct investments.
“The electronics manufacturing services sector could see further positive spillover from this trade diversion as it acts as a final assembly point for electronic goods,” he added, the newspaper reported.
-BTS Media
