(Bloomberg) – Malaysian chip companies are holding investments and expansions while awaiting a definition of US tariffs, according to Wong Siew Hai, president of the Malaysian Semiconductor Industry Association.
Companies expect the US government to continue to exempt tariff semiconductors besides August 1, a deadline for increasing rates announced by then -President Donald Trump, Wong said in an interview with Bloomberg TV with Haslinda Amin.
“If this situation becomes clear, I believe the investments will continue,” he said. “Everyone is waiting to see how this will unfold.”
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Trump said he is considering applying additional rates in selected sectors, including semiconductors. On Monday (7), he announced that Malaysia could suffer a 25% tariff-“separated from sectoral tariffs”-from August 1, unless an agreement is closed with its administration. The country had already been hit by a 24% rate in April, before the US announced a 90 -day break, which reduced the rate to 10% of products to facilitate negotiations.
The US is the third largest market for Malaysian semiconductor exports. The country packs about one tenth of semiconductors produced in the world, while approximately two fifths of exports are composed of electrical and electronic products.
Wong commented that the industry is already feeling a slight increase in operating costs after Malaysia expands its sales and services tax from July 1, with some companies being more impacted than others. Although he could not quantify the effect, he said that it is something the companies will have to live with.
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“Malaysian companies will have to double their efforts to improve productivity through artificial intelligence, automation, robotics and become competitive globally,” he said.
Last year, Southeast Asian country compromised at least 25 billion ringgits ($ 5.9 billion) to support its semiconductor industry, seeking to expand its role in the face of US and China tensions that have been moving in global supply chains. The industry aims to double its exports to 1.2 trillion Ringgits by 2030, consolidating itself as the sixth largest chip exporter in the world.
Malaysia houses several chip packaging facilities for companies such as Intel Corp., Globalfoundries Inc. and Infineon Technologies AG, becoming an important regional hub in the global supply chain.
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