Trump's 300 pct chip tariffs threaten global semiconductor industry

Products such as smartphones, computers, medical devices, televisions, automobiles and appliances would become significantly more expensive, said Tsung Ming Chung of Dutch multinational company, ASML B.V.

Based in the Netherlands, ASML B.V. is one of the world's leading manufacturers of chip-making equipment.

Tsung, who is ASML's customer support service performance manager and has been with the company for 19 years, said the potential tariffs would have a major global impact, particularly on semiconductor manufacturers in countries like Malaysia, where the sector is one of the top export revenue earners.

It could even cause the industry to "grind to a halt," he told Bernama after appearing on Bernama TV's The Nation programme yesterday.

He said the tariffs' impact on semiconductor companies within America would not be too big, but the effect would be much greater for companies outside the US.

For example, Tsung noted that Intel's operations in Penang could be forced to pay the 300 per cent tariff to ship chips back to the US.

"I don't know how they are going to compete with the chips being created or manufactured in the US itself," he said.

Tsung, who is a Malaysian, noted that despite being one of the lower-end suppliers of semiconductor chips, Malaysia would also be affected by the tariff imposition because the country still has other products, such as automotive chips, which are most probably packed here and shipped to the US.

He added that the impact of the 300 per cent tariffs will be felt across the board.

Semiconductors are used in consumer electronics such as smartphones, laptops and televisions, as well as household appliances, automobiles, medical devices, industrial equipment and telecommunications.

"If Taiwan is manufacturing iPhones and they are importing them back to the US, your iPhone is going to cost more, not only in the US, but everywhere in the world," he said.

According to reports from a financial services company, the US imports most of its semiconductors from Taiwan, Malaysia, Israel, South Korea, and Ireland.

Semiconductor exports alone were valued at some RM60.6 billion, representing about 20 per cent of Malaysia's total semiconductor exports.

The industry employs more than 72,000 skilled workers and is supported by over 7,200 local suppliers, comprising mainly small and medium enterprises.

It is estimated that 65 per cent of Malaysia's semiconductor exports to the US are from American companies operating in Malaysia.

Asked about solutions to the high tariffs and prospects for ASEAN, Tsung emphasised the need for Southeast Asia to develop a region-wide ecosystem for the industry.

They could also strengthen tech cooperation with the Netherlands or with the European Union countries, ultimately reducing reliance on the US or Chinese markets, he said.

Tsung noted that ASEAN has the foundations for a semiconductor ecosystem, citing Malaysia's developed packaging industry as evidence that the necessary infrastructure and fabs are already in place.

"You have Silterra Malaysia Sdn Bhd, which only needs to upgrade its fab, along with the workforce and talent pool.

"You can't establish a workforce within one year; it takes time, but if ASEAN works together, if Singapore brings in the talent or Vietnam provides the workforce, then everyone wins," he said.

ASML specialises in the development and manufacturing of photolithography, which is used to produce integrated circuits.

It is the sole supplier of extreme ultraviolet lithography (EUVL) photolithography machines that are required to manufacture the most advanced chips.

-- BERNAMA