Malaysia’s semiconductor sector to benefit from ‘neutrality’ amid US-China tech war

Malaysia’s semiconductor industry stands to benefit from the escalating US-China tech war, as trade restrictions steer more companies to consider the Southeast Asian country as a viable alternative in the global chip supply chain, according to experts.

As the US government continues to tighten trade restrictions on China, Malaysia is seeing more opportunities to develop its semiconductor industry, which has advantages in back-end operations such as chip testing and packaging, according to a panel discussion at the China Conference: Southeast Asia 2025 hosted by the South China Morning Post in Kuala Lumpur on Monday.

“Definitely, for the semiconductor industry, the impact it has on China will benefit Malaysia,” Wong Siew-hai, president of the Malaysia Semiconductor Industry Association (MSIA), said.

He said companies in the industry are looking at Malaysia as an alternative in the chip supply chain because it is considered a “neutral country … so they can serve the US, China and the rest of the world”.

That assessment reflects how Malaysia’s efforts to ramp up its semiconductor sector appear to be paying off.

Last May, Kuala Lumpur released its National Semiconductor Strategy, which is backed by RM25 billion ringgit (US$5.6 billion) in funding support and targeted incentives. The plan aims to transform the country into a semiconductor powerhouse over the next decade by expanding into chip design, high-end manufacturing and advanced packaging.