(Reuters) -Safety and enterprise security services provider Motorola Solutions raised annual revenue forecast on Thursday, driven by robust demand for its safety and security solutions.
KUALA LUMPUR: Local semiconductor companies in the tech supply chain will need to brace for impact since the United States has now voiced its clear intention to reshore these type of manufacturing back to the country with plans to impose a 100% tariffs on semiconductors.
While Malaysia’s semiconductor exports to the United States remain exempt from retaliatory tariffs for now, the Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said the industry will be severely impacted if tariffs are eventually imposed on this sector. “If semiconductors are subjected to tariffs under Section 232 or if there are future policy changes, the impact on the country will be significant. “Malaysia risks losing a key market in the United States if our products become less competitive due to the imposition of these tariffs. “However, it should be emphasised that, to date, the United States government has not yet announced in detail the implementation mechanism for the tariffs,” Tengku Zafrul told Parliament yesterday. “Based on current information, exemptions are not country-based, but may only be granted to companies that invest directly in the United States, regardless of where their operations are located in other countries. “Therefore, the impact will heavily depend on the investment and operational structure of multinational companies based in Malaysia,” he added in his reply. Based on 2024 data, Tengku Zafrul said Malaysia’s exports of electrical and electronics goods to the United States reached RM119.86bil, accounting for around 20% of the country’s total E&E exports. Semiconductor exports alone were valued at some RM60.6bil, representing about 20% of Malaysia’s total semiconductor exports. This industry involves more than 72,000 skilled workers and is supported by over 7,200 local suppliers, comprising mainly small and medium enterprises. “The spillover benefits of the E&E and semiconductor industries also contribute to the growth of Malaysia’s automotive, medical equipment, renewable energy, digital, and aerospace sectors,” he noted. “Many companies which are based in Malaysia – the multinationals also have operations in the United States. “While there is nothing formal yet , there will definitely will be an impact and we need to know more details – as to which companies in Malaysia –especially the United States companies that will be affected,” Tengku Zafrul later said at the Asean Business Community Development Forum 2025. He pointed out there are many US companies in Malaysia which have Malaysian suppliers and many of these are listed on Bursa Malaysia. “The E&E sector is big in Malaysia. It is still early days and we don’t know the details but definitely there will be an impact for those companies who are affected by these developments.“I’m sure our friends in Singapore are also very involved in this semiconductor supply chain in the United States and Vietnam to a certain extent as well.Meanwhile, analysts are split on the effect the latest levies will have on the domestic semiconductor industry, noting that Malaysia is not a big-scale manufacturer per se, but is more active in the assembly, testing and packaging end of the production chain. While understandably concerned that this latest episode in the tariff saga could have global repercussions, industry observers are not entirely ruling out that US President Donald Trump could be open to another U-turn, or at least further discussions. Head of dealing at Moomoo Malaysia, Ken Low, told StarBiz it is significant that Malaysia is currently exempt from the proposed 100% tariff. This is especially given that Malaysia ranks as the third-largest supplier of semiconductors to the United States, accounting for around 14.6% of their total imports in this category. Low said future eligibility may be influenced by factors such as geographic diversification, supply chain resilience, and the presence of US-based manufacturing. “As such, while the short-term outlook is stable, the landscape is fluid, and companies will need to stay adaptive as global trade policies evolve,” he said. He predicts that any indication of long-term alignment with global supply chain shifts – be it through US partnerships, local capacity building, or regional diversification – can offer valuable signals about a company’s strategic agility and potential resilience in a more fragmented global market. Citing 2024 data, assistant manager of research at iFast Capital Kevin Khaw Khai Sheng pointed out that Malaysian exports of E&E products to the Unites States stood at approximately RM120bil, followed by RM113bil to Singapore, with the latter then re-exporting to other nations. Given the significant amount of US exports, he is expecting Malaysian semiconductor companies - whether they are outsourced semiconductor assembly and test players or electronics manufacturing services providers - to be impacted by the latest news, except for companies that are focused domestically or not exporting to the United States. “The question is just the magnitude of how severe the impact to respective companies will be. That said, more clarity is still needed on how these new policies are going to be imposed and what would result from further negotiations. “We believe global leaders will start to negotiate with the United States again regarding this new tariff and we will closely monitor the development,” Khaw said. On the other hand, head of equity sales and analyst at Rakuten Trade, Vincent Lau, believes it is too early to quantify the effect the new levies will have on Malaysian semiconductor companies, attributing the adverse reaction towards the share prices on industry players to a knee-jerk reaction.Dnex owns 60% of Silterra Malaysia Sdn Bhd, who manufactures semiconductor wafers, while Globetronic produces optoelectronic and sensor components. Inari manufactures radio frequency chips for US firm Broadcom Inc and MPI makes advanced packaging for semiconductor devices. The domestic semiconductor industry is, to a significant extent, serving American multinational companies , and therefore it is difficult at the moment to see how the “100% tariff” will affect local players, Lau said, especially since the current exemption for Malaysia’s semiconductor still stands. “Firstly, we are of the view that Trump is targeting the front end manufacturing, which is higher up in the value chain. “Our companies largely make up the back-end manufacturing; testing and assembly stage of the ecosystem, especially for American MNCs, even though we have grown to become a key player for this part of the process,” he added. Kenanga Research, in a note to clients yesterday, anticipated the new tariffs to disrupt the global semiconductor supply chain. It said the protectionist stance could accelerate the shift of manufacturing footprints into the United States, particularly among firms seeking to mitigate tariff risks. Nonetheless, the brokerage firm added that clarity is still lacking on the specific product categories that fall under the definition of “semiconductors” covered by the tariff, leaving room for further interpretation.
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