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New Straits Times
a day ago
- Business
- New Straits Times
US tariff plan may spark semiconductor front-loading
KUALA LUMPUR: The United States' plan to impose a 100 per cent tariff on semiconductors is expected to trigger a wave of front-loading activity across the global supply chain, according to CIMB Securities Sdn Bhd. Analyst Mohd Shanaz Noor Azam 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 said the potential implementation of the semiconductor tariff would be negative for the sector, although he 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. Mohd Shanaz said among local ATE players, 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. Meanwhile, outsourced semiconductor assembly and test (OSAT) players such as Unisem (M) Bhd and Malalysian 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. 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.
Business Times
a day ago
- Business
- Business Times
Malaysia's chip players pause investment plans, tech stocks tumble on Trump's 100% tariff threat against semiconductors
[KUALA LUMPUR] Malaysian tech stocks underwent a broad sell-off on Thursday (Aug 7), and the country's giant semiconductor sector was jittery as it struggled to process US President Donald Trump's plan to impose a 100 per cent tariff on imported semiconductor chips. The proposed tariffs, targeting all semiconductors produced outside the US or by such companies with no plans to set up plants on American soil, triggered declines in 71 technology counters on Bursa Malaysia. Wong Siew Hai, president of the Malaysia Semiconductor Industry Association, said that the abrupt announcement has created confusion, and that industry players are taking a wait-and-see approach, including calling a pause on their investment plans. He told The Business Times: 'We can't say more for now; we will have to wait for more details from Washington on how this tariff will be implemented.' Last year, Malaysia exported nearly RM120 billion (S$36.4 billion) in electrical and electronics products to the US, accounting for a fifth of its total electrical and electronics exports. Semiconductor exports alone amounted to RM60.6 billion, or about 20 per cent of Malaysia's total chip shipments. Among the hardest hit were Malaysian Pacific Industries. Its share price fell 20 sen or close to 1 per cent, to RM20.30 at the close of trading on Thursday. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The share prices of D&O Green Technologies and KESM Industries, also one of the top losers, dropped six sen to RM1.04 and RM2.58, respectively. The Bursa Malaysia Technology Index, comprising 49 stocks, rose 0.2 per cent to 52.27 at Thursday's close, but the index remained down 0.7 per cent for the week; it has fallen 19.7 per cent since the start of the year. On Thursday, the top five constituents of the technology index turned in mixed performances. While Malaysian Pacific Industries, Frontken Corporation and Zetrix AI (formerly MY E.G. Services) also finished the day lower, Vitrox Corporation and Inari Amertron rebounded in the second half of trading, after logging declines earlier in the day. The falls followed Trump's announcement from the Oval Office on Wednesday that the tariff would apply to 'all chips and semiconductors coming into the US', unless companies were building or planning to build facilities within the US. He added that firms falsely claiming to invest in the US would face retroactive tariffs. The announcement was the latest escalation in Washington's push to rebuild its domestic chip capacity and lower the country's dependence on foreign supply chains. Under this drive, the Department of Commerce initiated an investigation in April to assess the risks posed to national security from imports of semiconductors and related equipment. Putrajaya warns of economic blow Malaysia's Investment, Trade and Industry Minister Tengku Zafrul Aziz said: 'Malaysia risks losing a key market in the United States if our products become less competitive due to the imposition of such tariffs.' REUTERS Malaysia's Investment, Trade and Industry minister Tengku Zafrul Aziz warned that the country could suffer a major blow if its semiconductor exports to the US become subject to such steep tariffs. 'Malaysia risks losing a key market in the United States if our products become less competitive due to the imposition of such tariffs,' he said in Parliament on Thursday. He noted, however, that the US has yet to detail the implementation mechanism and that Malaysia's exports remain exempt from the tax for now. Still, the status is 'subject to review', and may shift with future US trade decisions. Tengku Zafrul said that the government has stepped up engagement with Washington and is working closely with Bank Negara Malaysia to assess the potential economic impact. The Ministry of Investment, Trade and Industry is also stepping up its outreach to the country's major exporters and related industries, and also urging companies to diversify their export markets to reduce their reliance on the US. The US' 19 per cent tariff on Malaysian imports, effective Aug 7, is a reduction from the previous rate of 24 per cent. The minister noted earlier that tariffs on pharmaceutical products and semiconductors remain at zero per cent, and that Washington has signalled its readiness to offer more exemptions in ongoing talks. Malaysia is the world's sixth-largest semiconductor exporter. Its electrical and electronics and chip sectors employ more than 72,000 skilled workers, and are supported by over 7,200 mostly small and medium-sized local suppliers. These industries are also growth engines for the automotive, medical device, renewable energy, aerospace and digital sectors, added Tengku Zafrul. Dampening future demand Malaysia's electrical and electronics and chip sectors employ more than 72,000 skilled workers, and are supported by over 7,200 mostly small and medium-sized local suppliers. BT FILE Analysts have warned that the proposed tariffs could disrupt global supply chains and drive up production costs. These higher costs would likely be passed on to consumers, ultimately dampening demand. In a note on Thursday, TA Securities said that it anticipates more conditional exemptions to be announced over time, given the complexity and interdependence of the global semiconductor supply chain. It noted in a report: 'It would be extremely difficult for the US to fully repatriate the semiconductor value chain in the near term, as building a self-sufficient ecosystem would take decades.' Despite the uncertainty, global demand for semiconductor manufacturing equipment remains robust. Citing data from industry association Semiconductor Equipment and Materials International (SEMI), TA Securities expects global sales by equipment makers to reach a record US$125.5 billion in 2025, and US$138.1 billion in 2026. Sales of wafer-fabrication equipment are forecast to rise 6.2 per cent in 2025 and 10.2 per cent in 2026, reaching RM516 billion. Demand for assembly, packaging and testing equipment is also projected to grow as chips become more complex. Jeremy Goh, head of research at CGS International, said firms that are in Malaysia's outsourced semiconductor assembly and test market, along with those in automated test equipment and electronics manufacturing services would be directly hit by steep tariffs, because of their deep exposure to consumer electronics and automotive clients. He flagged two companies in particular – Vitrox and Pentamaster, which derived 14 per cent and 7 per cent of their revenue, respectively, from US-bound shipments in 2024.
Business Times
2 days ago
- Business
- Business Times
Malaysia's semiconductor players befuddled, tech stocks tumble on Trump's 100% tariff threat against chips
[KUALA LUMPUR] Malaysian tech stocks underwent a broad sell off on Thursday (Aug 7), and the country's giant semiconductor sector was jittery as it struggled to process US President Donald Trump's plan to impose a 100 per cent tariff on imported semiconductor chips. The proposed tariffs, targeting all semiconductors produced outside the US or by such companies with no plans to set up plants on American soil, triggered declines in 71 technology counters on Bursa Malaysia. Wong Siew Hai, president of the Malaysia Semiconductor Industry Association, said the abrupt announcement has created confusion, and that industry players are taking a wait-and-see approach, including calling a pause on their investment plans. He told The Business Times: 'We can't say more for now; we will have to wait for more details from Washington on how this tariff will be implemented.' Last year, Malaysia exported nearly RM120 billion (S$36.4 billion) in electrical and electronics products to the US, accounting for a fifth of its total electrical and electronics exports. Semiconductor exports alone amounted to RM60.6 billion, or about 20 per cent of Malaysia's total chip shipments. Among the hardest hit were Malaysian Pacific Industries. Its share price fell 20 sen or close to 1 per cent, to RM20.30 at the close of trading on Thursday. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The share prices of D&O Green Technologies and KESM Industries, also one of the top losers, dropped 6 sen to RM1.04 and RM2.58, respectively. The Bursa Malaysia Technology Index, comprising 49 stocks, rose 0.2 per cent to 52.27 at Thursday's close, but the index remained down 0.7 per cent for the week; it has fallen 19.7 per cent since the start of the year. On Thursday, the top five constituents of the technology index turned in mixed performances. While Malaysian Pacific Industries, Frontken Corporation and Zetrix AI (formerly MY E.G. Services) also finished the day lower, Vitrox Corporation and Inari Amertron rebounded in the second half of trading, after logging declines earlier in the day. The falls followed Trump's announcement from the Oval Office on Wednesday that the tariff would apply to 'all chips and semiconductors coming into the US', unless companies were building or planning to build facilities within the US. He added that firms falsely claiming to invest in the US would face retroactive tariffs. The announcement was the latest escalation in Washington's push to rebuild its domestic chip capacity and lower the country's dependence on foreign supply chains. Under this drive, the Department of Commerce initiated an investigation in April to assess the risks posed to national security from imports of semiconductors and related equipment. Putrajaya warns of economic blow Malaysia's Investment, Trade and Industry Minister Tengku Zafrul Aziz said: 'Malaysia risks losing a key market in the United States if our products become less competitive due to the imposition of such tariffs.' REUTERS Malaysia's Investment, Trade and Industry minister Tengku Zafrul Aziz warned that the country could suffer a major blow if its semiconductor exports to the US become subject to such steep tariffs. 'Malaysia risks losing a key market in the United States if our products become less competitive due to the imposition of such tariffs,' he said in Parliament on Thursday. He noted, however, that the US has yet to detail the implementation mechanism and that Malaysia's exports remain exempt from the tax for now. Still, the status is 'subject to review', and may shift with future US trade decisions. Tengku Zafrul said the government has stepped up engagement with Washington and is working closely with Bank Negara Malaysia to assess the potential economic impact. The Ministry of Investment, Trade and Industry is also stepping up its outreach to the country's major exporters and related industries, and also urging companies to diversify their export markets to reduce their reliance on the US. The US' 19 per cent tariff on Malaysian imports, effective Aug 7, is a reduction from the previous rate of 24 per cent. The minister noted earlier that tariffs on pharmaceutical products and semiconductors remain at zero per cent, and that Washington has signalled its readiness to offer more exemptions in ongoing talks. Malaysia is the world's sixth-largest semiconductor exporter. Its electrical and electronics and chip sectors employ more than 72,000 skilled workers, and are supported by over 7,200 mostly small and medium-sized local suppliers. These industries are also growth engines for the automotive, medical device, renewable energy, aerospace and digital sectors, added Tengku Zafrul. Dampening future demand Analysts have warned that the proposed tariffs could disrupt global supply chains and drive up production costs. These higher costs would likely be passed on to consumers, ultimately dampening demand. In a note on Thursday, TA Securities said that it anticipates more conditional exemptions to be announced over time, given the complexity and interdependence of the global semiconductor supply chain. It said in a report: 'It would be extremely difficult for the US to fully repatriate the semiconductor value chain in the near term, as building a self-sufficient ecosystem would take decades.' Despite the uncertainty, global demand for semiconductor manufacturing equipment remains robust. Citing data from industry association Semiconductor Equipment and Materials International (SEMI), TA Securities expects global sales by equipment makers to reach a record US$125.5 billion in 2025, and US$138.1 billion in 2026. Sales of wafer-fabrication equipment are forecast to rise 6.2 per cent in 2025 and 10.2 per cent in 2026, reaching RM516 billion. Demand for assembly, packaging and testing equipment is also projected to grow as chips become more complex. Jeremy Goh, head of research at CGS International, said firms that are in Malaysia's outsourced semiconductor assembly and test market, along with those in automated test equipment and electronics manufacturing services would be directly hit by steep tariffs, because of their deep exposure to consumer electronics and automotive clients. He flagged two companies in particular – Vitrox and Pentamaster, which derived 14 per cent and 7 per cent of their revenue, respectively, from US-bound shipments in 2024.
BusinessToday
2 days ago
- Business
- BusinessToday
MITI Responses To US 100% Tariff On Semiconductors
The Minister of Investment, Trade and Industry said that while Malaysia's semiconductor exports to the U.S. are currently exempt from reciprocal tariffs, this status could change at any time. he U.S. Administration, through its Department of Commerce, launched a Section 232 investigation in April to determine if semiconductor imports and related manufacturing equipment pose a threat to U.S. national security. The outcome of this investigation could be the basis for a blanket 100% tariff on these products, with exemptions only for companies that have invested in or committed to building manufacturing facilities in the U.S. The reply was in response to questions asked during the parliament session after Washington said it would raise tariffs to 100% on semiconductor chips today. Highlighting the importance of the E&E sector to the Malaysian economy, the minister shared key 2024 data that total E&E exports from Malaysia to the U.S. reached RM119.86 billion, accounting for approximately 20% of the country's total E&E exports. Semiconductor exports alone were valued at RM60.6 billion, representing about 20% of Malaysia's total semiconductor exports. The industry is a major employer, providing jobs for over 72,000 skilled workers and supporting more than 7,200 local small and medium-sized enterprises (SMEs). Its benefits also extend to other key sectors, including automotive, medical devices, renewable energy, and aerospace. The minister sais that the government is taking proactive steps to mitigate the potential impact of the tariff. The Ministry of Investment, Trade and Industry (MITI) is in constant communication with the United States Trade Representative (USTR) and the Department of Commerce. The goal is to obtain official clarification and negotiate on behalf of Malaysian exporters to ensure that Malaysia's position as a strategic trading partner is maintained. In addition to diplomatic efforts, the government is also encouraging local industry players to diversify their export markets to alternative countries. The minister stressed that the final impact of the tariff, if implemented, would depend heavily on the investment and operational structure of multinational corporations based in Malaysia. The government remains committed to closely monitoring the situation, engaging proactively with U.S. authorities, and advocating for the interests of Malaysian businesses to navigate these potential changes in trade policy.
