[News] Malaysia Pays $250M to Arm, Aims to Build Homegrown Chips

According to Reuters, Malaysia has reached an agreement to pay Arm Holdings USD 250 million over a decade in exchange for the company’s chip design plans for local manufacturers. The initiative aims to develop Malaysia’s own chips within the next five to ten years, driven by the rising demand for AI and data centers, as highlighted in the report.

As the report notes, Malaysia’s Economy Minister, Rafizi Ramli, stated that the government will pay Arm for its intellectual property, which includes seven high-end chip design blueprints. Additionally, the agreement will include the training of 10,000 engineers in Malaysia.

Malaysia expects that its agreement with Arm will support the expansion of domestic semiconductor manufacturers, with a goal of establishing 10 local chip companies, generating annual revenue between USD 1.5 billion and USD 2 billion each, as noted in the Reuters report.

Major Tech Companies Investing in Malaysia

Malaysia is already a vital hub for chip testing and packaging; however, it has yet to build a significant presence in chip design, as a report from Bloomberg highlights. Currently, the country hosts several chip-packaging facilities operated by Intel, GlobalFoundries, and Infineon Technologies AG, as reported by Bloomberg.

Notably, Malaysian Trade Minister Tengku Zafrul Aziz claims that Malaysia contributes approximately 13% of global chip testing and packaging, as highlighted in another Reuters report.

Malaysia’s semiconductor industry has benefited from the escalating U.S.-China tech war, as noted by South China Morning Post. The report highlights that the country’s neutral stance amid these ongoing tensions has created significant opportunities for semiconductor industry growth, particularly in back-end operations such as chip testing and packaging.

However, while Malaysia has benefited from trade diversion due to its neutrality, sustaining this advantage will become increasingly challenging as both China and the U.S. impose more intrusive trade measures in the semiconductor supply chain, according to Professor Dr. Chris Miller, author of Chip War: The Fight for the World’s Most Critical Technology, as cited in a report from The Edge Malaysia.

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(Photo credit: Arm)