Malaysia’s Semiconductor Industry Faces Uncertain Future Despite Current Tariff Exemption

Malaysia’s semiconductor firms, while temporarily exempt from new US tariffs, face future risks as noted by industry leaders. The impending 24% tariff by the US could still affect semiconductors indirectly through other product tariffs. The Malaysian government plans to negotiate with the US to address these concerns.

Malaysia’s semiconductor industry is currently experiencing some relief as it is exempt from the new broad tariffs announced by the United States. However, Datuk Wong Siew Hai, president of the Malaysia Semiconductor Industry Association, warns that the industry is not completely out of danger. Future trade actions by the US could target semiconductors specifically, affecting both Malaysian firms and American companies operating within the country.

On April 9, President Donald Trump is set to implement a 24% tariff on goods imported from Malaysia, part of a broader trade policy impacting all trading partners. While semiconductors are exempt from this particular reciprocal tariff, their overall fate remains uncertain, as they play a crucial role in various products that may incur tariffs.

Electrical and electronic goods, comprising approximately 40% of Malaysia’s total exports, significantly rely on semiconductor components. Wong emphasizes that semiconductors could be impacted by indirect tariffs on finished products such as computers and industrial machines, stating, “If the product is shipped to the US, it will be captured under the equipment tariff.”

Industry leaders are currently adopting a cautious approach, preferring to “wait and see” amidst the unpredictable nature of the Trump administration. Negotiations regarding these tariffs are ongoing, as Malaysia’s Ministry of Investment, Trade & Industry seeks to engage with the United States to potentially mitigate impacts on the semiconductor sector.

In conclusion, while Malaysia’s semiconductor industry currently avoids tariff impacts, uncertainties persist regarding future US trade actions. Industry representatives remain vigilant amid the evolving landscape, highlighting the potential for indirect tariff repercussions. The ongoing negotiations between Malaysia and the US may offer some hope for the industry as participants closely monitor developments.

Original Source: theedgemalaysia.com