Malaysia has entered into a $250m agreement with UK-based chip design firm Arm Holdings in a bid to boost semiconductor production. Under the ten-year collaboration, SoftBank Group-owned Arm will provide local Malaysian manufacturers with advanced chip designs and technological expertise, reported Bloomberg.
The move marks a significant shift for the Southeast Asian nation from its current role in chip assembly and packaging to semiconductor production. “We have always wanted to move from the back-end — which is on testing and assembly — to the front-end,” Malaysian Economy Minister Rafizi Ramli said in an interview with Bloomberg Television. Separately, Minister Rafizi said that the partnership with Arm would also include training 10,000 engineers in Malaysia.
Malaysia to support local chip companies
The Malaysian government has outlined plans to leverage this partnership to support local companies with chip production and achieve semiconductor exports worth MYR1.2 trillion ($270bn) by 2030. This initiative is expected to generate up to $20bn in annual revenue from as many as ten homegrown chip firms. The pact is also anticipated to boost the nation’s economic output, potentially adding one percentage point to Malaysia’s gross domestic product (GDP).
The economy ministry and Arm are expected to have selection criteria to choose local companies, considering the value of the intellectual property, Reuters reported, quoting Minister Rafizi.
Currently, Malaysia operates primarily as a chip testing and packaging hub, hosting facilities for major industry players such as Intel, GlobalFoundries, and Infineon Technologies.
Last year, Malaysia committed at least MYR25bn ($5.6bn) to support its semiconductor sector and strengthen local manufacturing. The recent agreement with Arm Holdings is expected to accelerate the country’s timeline for producing its own chips, with the goal now set for the next five to seven years. Notably, electric and electronic products account for nearly two-fifths of the exports for the Southeast Asian nation.
Malaysia’s deal with Arm comes amid turmoil in the chipmaking sector, as semiconductor manufacturers face potential challenges from proposed US tariffs. The Asian nation’s efforts mirror a global trend wherein countries are increasingly prioritising the establishment of local semiconductor manufacturing to secure their technological future and national security.
Recently, Taiwan Semiconductor Manufacturing Co (TSMC) unveiled plans to expand its US operations with an additional $100bn investment. The contract chipmaker will establish three new fabrication plants, two advanced packaging facilities, and a major research and development (R&D) centre in the country.
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