US chip tariffs on Malaysia could hit America, global supply

Its executive vice president, Marc Mealy said debilitating tariffs could affect Malaysia, which supplies crucial semiconductor auto chips globally and to American automakers.

"There is data that shows a significant number of those chips that end up in the US market have passed through Malaysia," he told Bernama in an interview on Monday.

He cited that Malaysia was exporting up to 15 per cent of semiconductor chips to the US, which were consumed by American automotive sectors.

"This is a significant number and, therefore, imposing tariffs on semiconductor exports from Malaysia to the US could trigger ripple effects across global supply chains and disrupt manufacturing processes," he added.

Based on news reports, Malaysia's semiconductors and integrated circuits exports to the US last year totalled about RM52.11 billion.

Many of these semiconductor exports from Malaysia are manufactured by American companies operating here, such as Intel, Broadcom and Micron.

The US imported about US$40 billion (US$1=RM4.21) worth of chips in 2024, mainly from Taiwan, Malaysia, Israel, South Korea, Ireland, Vietnam, Costa Rica, Mexico and China, according to a report by the American Enterprise Institute, a Washington-based think-tank on government, politics, economics and social welfare.

While the US government is introducing sectoral tariffs, the move to impose blanket tariffs on chips from Malaysia could be highly consequential, Mealy said.

"Malaysia is a global player in supply chains for chips. If you want to say that when you bring in those chips (to the US), you must pay a tax of 100 per cent or 200 per cent to the US government, many importers of those chips would stop buying them.

"If you stop buying chips, that means certain things like vehicles and electronics do not get manufactured and therefore would not be available in the marketplace," he said.

Mealy said data also show that Malaysia is a major location for testing, assembly and packaging of chips. There are global supply chains that go from Taiwan, Japan and China, pass through Malaysia and then go out to the rest of the world.

In view of these realities, Mealy said the US administration would have to think carefully about whether it wants to impose tariffs on chips, carve out a strategic plan, or be selective in how it is done.

"It shows that they recognise Malaysia has a major role to play in that particular industry.

"You cannot just put 100 per cent tariffs on all chips from Malaysia because you would probably disrupt the marketplace, both here and in America," he said.

Last August, US President Donald Trump warned that the government would impose tariffs of up to 300 per cent on imported semiconductors but spare companies that already make chips in the country or plan to do so.

-- BERNAMA