Malaysia's semiconductor exports still exempted from retaliatory tariffs, says Tengku Zafrul
The Investment, Trade and Industry Minister said the exemption remains in place at present, but it is subject to review and may be affected by future shifts in US trade policy.
'Currently, Malaysia's semiconductor exports to the US are not subjected to the retaliatory tariffs. However, this exemption is conditional and may change depending on the US government's evolving policies,' Tengku Zafrul told the Dewan Rakyat on Thursday (Aug 7).
He was responding to Lim Guan Eng (PH–Bagan), who asked about reports that US president Donald Trump had announced plans to impose 100% tariffs on semiconductors imported from countries that do not produce — or do not plan to produce — chips within the US and only companies that have invested in or are building chip-manufacturing facilities in the US would reportedly be exempt.
'This is a significant move that will undoubtedly affect major semiconductor-exporting countries like Malaysia,' Tengku Zafrul said.
He said that in April, the US Department of Commerce launched an investigation under Section 232 of its Trade Expansion Act to determine whether imports of semiconductors, chip-making equipment and related products pose a threat to US national security.
'Although the report was initially expected by the end of December, we've learnt that the timeline has been expedited.
'Preliminary findings from this investigation may soon form the basis for future policy decisions — including the possibility of higher tariffs,' he said
Tengku Zafrul stressed that the US government has yet to officially announce the mechanism for implementing the tariffs.
'Based on current information, the exemptions may not be based on countries, but on companies that invest directly in the US, regardless of where they are headquartered,' he said.
As such, the impact on Malaysia would depend largely on the structure and investment strategies of multinational firms operating locally.
Tengku Zafrul said Malaysia's electrical and electronics (E&E) exports to the US totalled RM119bil in 2024 — roughly 20% of the country's total E&E exports.
Of that, semiconductors alone made up RM60.6bil, or about 20% of Malaysia's total semiconductor exports.
He noted that 68% of Malaysia's semiconductor exports to the US came from American companies based in Malaysia.
'These companies employ around 72,000 skilled Malaysian workers and are supported by approximately 7,200 local suppliers, most of which are SMEs,' he said.
He said the government is also ramping up outreach and engagement with key local exporters and players in the semiconductor supply chain, while encouraging companies to expand to alternative markets.
'Ultimately, we are committed to monitoring this development closely and negotiating proactively.
'We want a clear understanding of what the US defines as 'semiconductors' in this context, so our industry can prepare appropriately,' he said.
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