GEORGE TOWN – The United States’ latest trade policy could have significant implications for Malaysia’s semiconductor industry, particularly in Penang, which is home to more than 350 multinational technology firms.
US President Donald Trump announced yesterday that he would introduce new tariffs on automobile, semiconductor, and pharmaceutical imports in early April, with initial duties starting at 25%, according to The Hill.
Speaking at a press conference at his Miami estate, Mar-a-Lago, Trump said he expects to unveil the tariffs on April 2. The duty on auto imports would be “in the neighbourhood of 25%”, while levies on semiconductor and pharmaceutical imports could be 25% or higher.
“These tariffs will go very substantially higher over the course of a year,” he said.
However, he noted that companies moving their manufacturing operations to the US would not be subjected to these tariffs.
“But we want to give them time to come in, because as you know, when they come into the United States and they have their plant or factory here, there is no tariff. So we want to give them a little bit of a chance,” he said.
Trump has increasingly relied on tariffs as a trade strategy, despite warnings from economists that such measures could drive up costs for American consumers.
Earlier this month, he approved a 25% tariff on imports from Mexico and Canada but later postponed implementation by a month after both nations took steps to curb drug smuggling at the border. The US has also imposed tariffs on Chinese imports, as well as duties on steel and aluminium.
Impact on Malaysia’s semiconductor industry
Trump’s tariff policy is expected to have a cascading effect on Malaysia’s semiconductor industry, particularly in Penang. Dubbed the “Silicon Valley of the East,” the state hosts major multinational tech firms supported by more than 3,000 manufacturing-related small and medium enterprises (SMEs).
According to state investment agency InvestPenang, major companies operating in the state include Intel Corporation, Hewlett-Packard (now Keysight Technologies and Agilent Technologies), Robert Bosch, AMD, Osram Opto Semiconductors, Renesas, Clarion, and Micron. Several Chinese semiconductor firms have also set up operations in Penang.
Despite concerns over the impact of tariffs, Penang Chief Minister Chow Kon Yeow recently expressed confidence in the state’s economic resilience.
“Our strong economic foundation, built over the past five decades, puts us in a good position to withstand these changes,” he was quoted as saying by Free Malaysia Today (FMT).
Chow acknowledged the uncertainty surrounding the tariffs, given Penang’s status as a key player in the global semiconductor supply chain.
“Any tariff or policy regarding trade would impact multinational companies, which would also directly impact the state in terms of employment opportunities and future investments. There is still a lot of uncertainty with regard to what will actually happen,” he said.
Meanwhile, Malaysia Semiconductor Industry Association (MSIA) president Datuk Wong Siew Hai noted that US trade restrictions on China could present opportunities for Malaysia.
“With US companies now restricted from purchasing from and shipping to China, they will need alternative solutions,” he was quoted as saying by Bernama. – February 19, 2025