Riding the tech trade tide

The Star

12-05-2025

In a video posted to his Facebook page on April 17, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said it is not impossible that an iPhone could end up costing as much as a car, given the impending US tariffs.
This comes as the world waits with bated breath over US President Donald Trump's flip-flopping on tariffs, at one point imposing a 145% import tax on Chinese goods entering the United States before walking it back ­during a White House press event on April 23.
On the other hand, Malaysia was hit with a 24% tariff on April 9, with a 90-day suspension period, alongside an additional 3,521% tariff on solar imports, which also impacts three other South-East Asian nations.
Highlighting the need for fair international trade, Tengku Zafrul gave the example of how even a simple dish like nasi lemak relies on an interconnected supply chain, with rice from Tanjung Karang, chilli from Negeri Sembilan, coconut from Bagan Datuk, and anchovies from Labuan.
'To make a pack of nasi lemak, the ingredients don't just come from the garden next door, but from all over the place. That is just a ­simple example. Now imagine a complex product like an iPhone, with components that come from all over the world.
'A chip from Taiwan, screen from Korea, battery from China, modem and memory from the United States, storage from Japan, camera from multiple ­countries, and finally ­assembled in China.'
Tengku Zafrul further predicted that the tariffs could cause the cost of an iPhone to triple due to the rising costs of components in the global supply chain, and potentially even go up by as much as seven times if the phones were to be manufactured entirely in the US.
He also added that when prices rise in the US, other countries would also feel the impact, as global prices for items like iPhones are typically based on their pricing in the American market.
Rising concern
Some local tech enthusiasts have been concerned about how the tariffs would impact prices since Trump won the US presidential ­elections back in November last year.
For Penang-based Foo Ce Xiang, this uncertainty was the main reason why he pulled the trigger on buying a new computer.
'I remember back when Covid-19 and the cryptocurrency boom hit in 2020, prices spiked up for computer parts, especially when it came to graphics cards.
'At the time, prices were so inflated that I just opted to skip upgrading entirely, so I was not going to take any chances this time, even though I'm not sure about how things will pan out,' he said.
Foo further added that if not for that, he would have waited for the next generation of hardware to release before making his purchase.
Siraj advises that Malaysians ­practise ­making informed purchases, avoid panicking, and put more thought towards assessing their needs before jumping to make a purchase. — SIRAJ JALIL
Meanwhile Siraj Jalil, president of the Malaysia Cyber Consumer Association (MCCA), said that he has not received any official reports of panic buying just yet, but warned that Malaysians should still be concerned.
'Tariffs are like a stone thrown into a pond which the ripples reach far and wide. These disruptions in the global supply chain can drive up production and logistics costs, eventually burdening end consumers, particularly in import-­dependent countries like Malaysia.
'Companies may take defensive measures, either absorbing part of the cost or passing it onto consumers. Local businesses might see an opportunity to fill the gap with more affordable, ­locally-made alternatives, but this depends on our ­ecosystem's ability to ­compete in terms of quality and pricing,' he said.
Aside from potentially higher prices, Siraj warned that some products may see reduced availability in the country due to them being pulled from the local market if profit margins no longer justify distribution.
Dr Arumugam G. Sithamparam, a senior lecturer at the Asia Pacific University of Technology & Innovation's (APU) School of Marketing and Management, similarly said that tariffs are likely to make tech products more expensive for consumers.
'If the proposed tariffs are implemented,' he said, 'Malaysian consumers are expected to bear the brunt of increased prices for technology products such as smartphones', and various other devices.
Arumugam serves as a referral expert to the 15th Parliamentary Special Select Committee on Finance and Economy (JKPKKE) after being appointed in November 2023.
Ripple effects
Arumugam further pointed out that certain categories of tech products are more likely to be hit harder than others, which include electric vehicles, devices used for virtual reality and augmented reality, and wearables.
Arumugam says that the costs incurred to companies by US tariffs may be passed on to consumers around the globe, including Malaysia. — APU
Similarly affected would be products such as TVs, gaming consoles, and smart home appliances, which require sophisticated components.
He further predicted that this may even result in supply shortages and delays in and out of Malaysia, with the heavy reliance on semiconductors as a key component in products like ­smartphones, laptops, and automotive technologies.
As quite a few major US-based ­semiconductor manufacturers are operating in Malaysia, any delays in their supply chains may hinder timely deliveries to both local and global ­markets, he said.
He noted that the Malaysian tech sector plays a big role in the nation's exports, with delays harming both the domestic ­supply and international ­obligations.
Arumugam added that for tech ­products, which people usually see as optional rather than essential, higher prices often lead to fewer purchases because people are less likely to buy when prices go up.
From the perspective of Dr Sunny Ooi, president of Internet Alliance Malaysia, a non-profit industry group, consumers should expect pricing for both products and services to be ­gradually revised upwards from Q2 2025 into the second half of 2025.
'We foresee these tariffs exercised by the US will affect the entire world and be industry-wide.
'Perhaps, the quantum of the exact impact will become more apparent in coming months once the costing is more affirmed at the top of the supply chain.
'For that, it is almost ascertained that the cost will surely pass on to ­consumers worldwide, including Malaysian consumers,' he said.
Ooi believes consumers should expect pricing for both products and services to be ­gradually revised upwards from Q2 2025 into the second half of 2025. — SUNNY OOI
According to Ooi, there has already been an indication of price revisions from some brands in anticipation of the tariff impact, largely due to rising material costs in affected countries where products are sourced or manufactured.
He added that additional cost pressures are also coming from indirect expenses, such as transportation and related services, as global economic realignments take effect.
Ooi also anticipates price revisions in the coming months for companies to match their financial budgets while balancing the market supply-demand needs.
This was echoed in a report from dpa in mid-April, which said that Sony confirmed that it would be raising the price of some PlayStation 5 models in the United Kingdom, Europe, Australia and New Zealand by about 25%, citing ­'challenging' economic conditions.
Similarly in early May, Microsoft increased prices for its Xbox Series S and Series X consoles, controllers, and games by over 20% worldwide. The tech giant cited ­'market conditions and the rising cost of development' for the hike.
Analysts in the report also said that similar announcements could be ­looming from other companies due to the turbulent tariff landscape.
On a more hopeful note
Meanwhile, the World Innovation, Technology and Services Alliance (Witsa) chairman, Datuk Dr Sean Seah, recognises the potential impact of the US tariffs on the local consumer ­technology market, but believes that Malaysia remains well-positioned to navigate these changes effectively despite the challenges for both businesses and consumers.
Seah believes that Malaysia has cultivated strong trade relationships and a robust supply chain ecosystem that can mitigate immediate disruptions. — SHAARI CHEMAT/The Star
'Malaysia has cultivated strong trade relationships and a robust supply chain ecosystem that can mitigate immediate disruptions.
'While tariff implications may contribute to cost adjustments, particularly in the countries faced with importing tech goods with elevated tariffs, this is not the case here, and market conditions suggest that widespread panic buying is unlikely.
'I understand retailers and industry players are actively implementing strategies to ensure stability, including diversifying supplier networks and managing inventory efficiently,' he said.
He added that circumstances moving forward are very much dependent on the following moves by key players in global trade negotiations, and that 'Malaysia's position as a strategic hub for technology manufacturing and exports remains strong, and ongoing diplomatic engagements will be crucial in shaping future trade policies'.
Coping mechanisms
Siraj advises that Malaysians ­practise ­making informed purchases, avoid panicking, and put more thought towards assessing their needs before jumping to make a purchase.
'If possible, delay non-essential ­buying and seek expert or consumer body advice. In challenging times, information is power and well-­informed consumers are protected consumers.
'This situation also opens up ­opportunities for innovation in ­refurbished tech products and encourages greater awareness of ­sustainable digital consumption,' he said.
Meanwhile, Ooi said that consumers will likely start turning to alternative brands and suppliers less affected by the tariffs for tech products in the event of price hikes.
Arumugam similarly advised that consumers consider less popular but equally effective brands to save money and avoid unnecessary upgrades ­driven by social pressures.
'Prioritise upgrading essential ­devices, including work-related laptops or smartphones, while putting off non-essential purchases, like gaming hardware.
'Users should be mindful of making impulsive buys and prioritise their ­genuine requirements,' he said.
Some local tech enthusiasts have been concerned about how the tariffs would impact prices since Trump won the US presidential ­elections back in November last year. — Image by freepik
He further recommended that ­consumers practise comparing prices between retailers and take advantage of discounts and cashbacks to deal with higher tech costs.
On the right timing to make a tech purchase, Arumugam said that it will depend on individual needs, financial circumstances, and market conditions.
'Further price increases for certain products are likely as a result of impending tariffs and potential disruptions due to mineral shortages or supply chain problems.
'If a need arises for a specific device for work, education, or daily life, ­buying early is a wise decision,' he says, especially since delays in product availability due to component ­shortages are possible.
'Popular devices like smartphones, laptops, or gaming hardware may sell out quickly during shortages. If ­current prices are reasonable and ­promotions are available, it might be a good time to make the purchase. It is difficult to predict when prices will normalise,' he says.
However, he also notes that patient consumers willing to wait for the ­market to stabilise will likely be rewarded with enhanced technology and lower prices.
'It is likely that when global supply chain issues stabilise, prices could decrease as production catches up with demand,' he said, further ­advising that consumers should ­monitor the market and set a price threshold to decide the best time to buy.
Rising tech prices may also push some consumers, particularly from lower and middle-income groups, towards opting for older models or second-hand devices.
Arumugam added that these items, notably smartphones, 'are gaining popularity among individual consumers due to their lower cost ­relative to brand new products.'
'New device prices have risen due to global supply chain disruptions or higher material costs, rendering newer models inaccessible to some consumers.
'Buying second-­hand items can be a cost-­effective and environmentally-­friendly choice,' he said.