SoftBank’s Arm Fuels Malaysia’s Semiconductor Ambitions

(Bloomberg) — Arm Holdings Plc has agreed to provide chip designs and technology to Malaysia over the next decade, aimed at catapulting the Southeast Asian country beyond chip assembly and into more valuable semiconductor production. Malaysia, which packages roughly a tenth of the world’s semiconductors, has inked a pact to pay the SoftBank Group Corp.-owned UK firm $250 million over a period of ten years for a slew of semiconductor-related licenses and knowhow.

Transforming Malaysia’s Chip Industry

The Malaysian government plans to leverage this partnership to assist local companies in designing their own chips, targeting semiconductor exports of 1.2 trillion ringgit ($270 billion) by 2030. “We have always wanted to move from the back-end — which is on testing and assembly — to the front-end,” Malaysian Economy Minister Rafizi Ramli stated in an interview with Bloomberg Television on Wednesday. “The government has taken a radical approach” to work with Arm “with the perspective of building the whole ecosystem.”

Creating a Thriving Chip Ecosystem

With the help of this landmark deal, Malaysia aims to establish as many as 10 chip companies, generating a total annual revenue of $20 billion, according to the minister. This initiative could potentially add one percentage point to the country’s gross domestic product (GDP). Malaysia is already recognized as a key hub for chip testing and packaging, but it has yet to make a significant entry into chip design.

The country currently hosts several chip-packaging facilities for major players like Intel Corp., GlobalFoundries Inc., and Infineon Technologies AG. Local chip equipment manufacturers are also making strides in the global supply chain, attracting industry giants such as Applied Materials Inc. to set up factories in Malaysia.

Government Support for Semiconductor Growth

Last year, the Southeast Asian nation pledged at least 25 billion ringgit to bolster its semiconductor industry. Minister Rafizi expressed optimism that Malaysia would begin producing its own chips within the next five to ten years. A vibrant local tech ecosystem, driven by its own chipmakers, would elevate Malaysia’s profile in a world of shifting global supply chains and foster the development of cutting-edge manufacturing processes domestically.

Addressing Geopolitical Challenges

In light of geopolitical uncertainties, supporting local chipmaking has become a top priority for Malaysia, where approximately two-fifths of exports consist of electric and electronic products. The collaboration with Arm Holdings is seen as a crucial step towards achieving self-sufficiency in semiconductor production and reducing reliance on foreign technology.

As Malaysia embarks on this ambitious journey, the partnership with SoftBank’s Arm is expected to catalyze significant advancements in the country’s semiconductor capabilities. The government’s commitment to nurturing a robust chip industry could not only enhance Malaysia’s economic landscape but also position it as a formidable player in the global semiconductor arena.

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