Some Malaysian chip exports may escape US 100pct tariff
Its head of research Michelle Chia and senior economist Azhar said this reflects the presence of US firms and other multinationals that depend on Malaysia's chip supply chain and have ongoing or planned capital investments in the US.
"The 65 per cent of Malaysia's semiconductor exports to the US that originate from US firms operating locally, and a portion of the remaining 35 per cent from firms with US affiliations, may still qualify for exemptions," they said in a note.
GDP IMPACT IF EXEMPTIONS FALL SHORT
However, they said if tariff implementation is worse than the base case of 65 per cent exemptions, every additional 10 per cent of semiconductor exports affected could translate to a 0.29 per cent drag on the gross domestic product.
They added that in the short term, the US may need to recognise the complexity of the semiconductor supply chain and that production relocation will take a considerable amount of time.
"We also believe that the US administration will be mindful of the potential impact of elevated tariffs on corporate earnings and consumer prices.
"Over the longer term, however, companies may be compelled to relocate production, potentially impacting investment decisions in the future," they said.
PRE-ORDER SURGE EXPECTED
Meanwhile, CIMB Securities Sdn Bhd analyst Mohd Shanaz Noor Azam said the planned 100 per cent tariff on semiconductors is expected to trigger a wave of front-loading activity across the global supply chain.
He said the activity could provide a temporary boost to demand, followed by a potential slowdown once the tariff comes into effect, though no implementation date has been confirmed.
He flagged the situation as negative for the sector, but did not rule out possible exemptions for certain multinational corporations (MNCs) that could renegotiate terms through strategic investment commitments in the US.
"Among Malaysian names, automated test equipment (ATE) makers could face the most direct near-term impact given their relatively high US revenue exposure.
"That said, some may benefit over the longer term from increased domestic capacity build-up in the US," he said.
MOST EXPOSED MALAYSIAN FIRMS
Mohd Shanaz said among local ATE players, Greatech Technology Bhd and Genetec Technology Bhd are the most exposed to the US market, with 65 per cent and 76 per cent of their FY24 revenue derived from US customers, respectively.
Outsourced semiconductor assembly and test (OSAT) players such as Unisem (M) Bhd and Malaysian Pacific Industries Bhd derive about 67 per cent and 20 per cent of their FY24 revenue from US customers.
Inari Amertron has minimal direct US exposure at less than one per cent, as most of its products are shipped to customer facilities in Malaysia and Singapore.
"Overall, we estimate that less than 10 per cent of the OSAT sector's revenue is ultimately shipped to the US, as most production volumes are routed through downstream assemblies in China, Mexico, or India, catering to demand in China, Europe and the rest of Asia.
"Within the electronics manufacturing services (EMS) segment, VS Industry Bhd and SKP Resources Bhd derive around 50 per cent and 20 per cent of their revenue, respectively, from US customers," Mohd Shanaz added.
INVESTMENT SENTIMENT AT RISK
Beyond demand risks, he said the uncertainty surrounding US tariff policy could delay new investments and expansion plans in Malaysia, especially for MNCs whose operations are closely tied to US end-demand.
He said a prolonged overhang from potential tariffs may prompt US-based semiconductor and electronics firms to pause or reallocate capital expenditure.
Exports of electrical and electronic products to the US reached RM119.9 billion in 2024, accounting for about 20 per cent of Malaysia's total E&E exports.
Notably, semiconductor exports to the US stood at RM60.6 billion, equal to roughly 20 per cent of Malaysia's total semiconductor export value in 2024.
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