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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.

South Korea Announces $34 Billion Fund to Support Strategic Industries

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South Korea has unveiled plans to establish a $34 billion policy fund aimed at providing financial support to companies operating in strategic sectors such as semiconductors and automotive manufacturing. The government’s decision is driven by escalating global competition and rising protectionist policies, particularly from the United States.

The state-run Korea Development Bank will manage the 50 trillion won fund, which will be distributed to firms in key industries over the next five years. The support will take the form of low-interest loans and investments. This initiative is part of South Korea’s broader strategy to strengthen its position in industries vital to its national economic security.

As the global landscape grows increasingly competitive, South Korea has identified 12 sectors as “national strategic technologies,” including semiconductors, future mobility, rechargeable batteries, biopharmaceuticals, aerospace, and artificial intelligence. These sectors will receive enhanced financial backing and protection to address challenges such as the fragmentation of global supply chains.

Additionally, the government’s semiconductor support package, introduced last year, will be incorporated into this new fund. In a bid to attract talent, South Korea also plans to offer “top-tier” visas and permanent residency to skilled foreign workers with experience in global firms, making it easier for them to join the country’s advanced technology sectors.

Samsung Electronics Union Approves 5.1% Wage Increase

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Samsung Electronics’ main union in South Korea has approved a 5.1% wage increase for 2024, finalizing a deal reached last month between the company and the National Samsung Electronics Union (NSEU). The agreement, which required ratification by union members, also includes additional benefits such as company product purchase points and 30 Samsung Electronics shares per employee.

The NSEU, representing approximately 36,000 members—around 30% of Samsung’s South Korean workforce—has previously engaged in strikes to demand better pay and working conditions. However, Samsung maintained that production remained unaffected during the disputes.

This resolution comes as Samsung Electronics faces intensified competition in the semiconductor market, particularly in AI-related memory chip production. The deal helps stabilize labor relations at a crucial time for the world’s largest memory chipmaker as it seeks to strengthen its position in the industry.