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Malaysia Discusses Absorbing Potential U.S. Semiconductor Tariffs with Chip Companies

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Malaysia is engaging with local semiconductor companies to discuss whether they can absorb the potential impact of U.S. tariffs on chips, according to Trade Minister Tengku Zafrul Aziz. The Southeast Asian country, which is a key player in the global semiconductor industry, is home to major U.S. chipmakers such as Intel and GlobalFoundries and is one of the leading exporters of chips to the United States.

In February, U.S. President Donald Trump announced intentions to impose tariffs of “25% or higher” on semiconductors, though the timeline for this decision remains unclear. Malaysia’s government is assessing the potential impact of these tariffs, with discussions focusing on whether the cost would be absorbed by the companies or passed on to consumers.

Tengku Zafrul stated that while exports would continue, someone would need to bear the increased cost, and it remains unclear whether the government will offer financial support to mitigate the effects of these tariffs. In 2023, Malaysia exported $16.2 billion worth of chips to the U.S., accounting for almost 20% of all U.S. semiconductor imports, highlighting the potential impact of the tariffs on Malaysia’s economy.

Regarding the growth of Malaysia’s data center industry, Tengku Zafrul assured that export restrictions on advanced chips imposed by the previous U.S. administration would not significantly affect the sector. The demand for artificial intelligence (AI) continues to drive investments, with U.S. tech giants like Microsoft, Google, Amazon, and Oracle establishing data centers in Malaysia.

However, the new restrictions, which take effect in May, limit U.S. cloud providers’ AI computing power deployment outside the U.S. to 50%, with only 7% allowed in countries like Malaysia that do not have privileged access to U.S. chips. Despite these restrictions, Tengku Zafrul emphasized that Malaysia’s data centers would not be affected, citing that U.S. companies operating in the country have adequate allocations under the new rules.

The strong growth of the data center sector in Malaysia is expected to continue, fueled by the high demand for AI technologies.

Singapore Charges Three Men in Connection with Fraud Against Dell and Super Micro

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Singaporean authorities have added additional charges against three men involved in a larger investigation into server fraud, which may involve AI chips. The charges are related to fraudulent activities committed against tech companies Dell and Super Micro. According to court documents, the men allegedly misrepresented the destinations of the servers they purchased, falsely claiming that the servers would not be transferred to unauthorized third parties.

The police charge sheets indicated that the defendants made false representations regarding the ultimate consignee of the items, suggesting that they would not be diverted. Investigations revealed that the servers may contain Nvidia chips, though authorities have not confirmed if these chips are subject to U.S. export controls.

This case is part of an ongoing investigation in Singapore, which involves 22 individuals and companies accused of making false representations. Additionally, the United States is investigating whether DeepSeek, a Chinese company behind a highly publicized AI model, has been using U.S. chips prohibited from being sold to China.

The investigation also covers Malaysia, where the servers allegedly ended up, and authorities there are exploring whether any local laws were violated. Singapore has so far charged two suspects, Aaron Woon, 41, and Alan Wei, 49, with conspiring to defraud Super Micro in 2024. Their charges have been amended to include fraud against Dell. A third suspect, Chinese national Li Ming, 51, was also charged with defrauding Super Micro in 2023.

Authorities seized 42 devices, including phones, computers, and laptops, which are being analyzed by forensic experts. The investigation is still in its early stages, with prosecutors seeking bank statements to trace the movement of funds and planning to work with international law enforcement.

Malaysia to Pay $250 Million for Arm Holdings Chip Design

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Malaysia has announced a $250 million agreement with Arm Holdings, spanning 10 years, to acquire chip design blueprints for local manufacturers. The deal aligns with the country’s ambition to develop its own graphics processing unit (GPU) chips within the next five to ten years, amid rising demand for artificial intelligence (AI) and data centers.

Prime Minister Anwar Ibrahim stated that the partnership would enable Malaysia to design, manufacture, and distribute AI chips globally. As part of the deal, Arm will establish its first Southeast Asian office in Kuala Lumpur, serving as a hub for regional expansion, including Australia and New Zealand.

Arm CEO Rene Haas emphasized Malaysia’s strong foundation in the semiconductor industry, citing its expertise in advanced packaging, assembly, and manufacturing. Economy Minister Rafizi Ramli revealed that the agreement covers seven high-end chip designs and includes a training program for 10,000 engineers.

The initiative aims to strengthen Malaysia’s semiconductor ecosystem by fostering 10 local chip companies, each projected to generate annual revenues between $1.5 billion and $2 billion. The government plans to develop a complete supply chain for AI servers, autonomous vehicles, IoT, and robotics, prioritizing local firms for key production roles.

Since 2023, global tech giants such as Microsoft, Nvidia, Google, and ByteDance have invested billions in Malaysia’s digital infrastructure, particularly in cloud services and data centers. The country is also constructing Southeast Asia’s largest integrated-circuit design park, offering tax breaks and subsidies to attract international tech players, with Arm expected to play a central role.