SoftBank’s Arm Partners with Malaysia for Semiconductor Revolution

(Bloomberg) — Arm Holdings Plc has officially entered into a strategic partnership with Malaysia, committing to provide cutting-edge chip designs and technology over the next decade. This collaboration aims to elevate Malaysia from its current role in chip assembly to a more lucrative position in semiconductor production.

Investment and Goals: A $250 Million Pact

Under the terms of the agreement, Malaysia will invest $250 million over ten years to acquire a range of semiconductor-related licenses and expertise from the SoftBank Group Corp.-owned UK firm. The Malaysian government has ambitious plans to leverage this investment to empower local companies to design their own chips, with a target of achieving semiconductor exports worth 1.2 trillion ringgit (approximately $270 billion) by 2030.

Transforming the Semiconductor Landscape

Malaysian Economy Minister Rafizi Ramli expressed the government’s commitment to shifting the country’s focus from back-end processes, such as testing and assembly, to front-end production. In an interview with Bloomberg Television’s Haslinda Amin, he stated, “The government has taken a radical approach to work with Arm with the perspective of building the whole ecosystem.” This initiative is expected to accelerate Malaysia’s goal of establishing its own chip manufacturing capabilities.

Creating a Thriving Chip Industry

With the support of this partnership, Malaysia aims to foster the creation of up to 10 chip companies, potentially generating total annual revenues of around $20 billion. The pact is projected to contribute an additional one percentage point to the country’s gross domestic product (GDP). While Malaysia has long been recognized as a key hub for chip testing and packaging, it has yet to make significant strides in chip design.

Current Landscape and Future Prospects

Currently, Malaysia hosts several chip-packaging facilities for major players like Intel Corp., GlobalFoundries Inc., and Infineon Technologies AG. Local chip equipment manufacturers are also making their mark in the global supply chain, attracting companies such as Applied Materials Inc. to establish factories in the region. Last year, the Southeast Asian nation pledged at least 25 billion ringgit to bolster its semiconductor industry.

Accelerated Timelines Amid Global Challenges

While Rafizi had previously indicated that Malaysia would begin producing its own chips within the next five to ten years, he has now revised that timeline to a more ambitious five to seven years. The establishment of a vibrant local tech ecosystem, driven by homegrown chipmakers, is expected to enhance Malaysia’s standing in a world characterized by shifting global supply chains. This development is crucial, especially given the geopolitical uncertainties that have made supporting local chipmaking a top priority for the nation, where electric and electronic products account for nearly two-fifths of exports.

Economic Outlook and Trade Concerns

As Malaysia commenced the year with optimism regarding its economic growth prospects, expectations were set for the economy to potentially exceed a growth rate of 5% due to resilient consumer spending and investment. However, officials are increasingly wary of the potential impact of U.S. tariffs on various imports, including semiconductors, which could adversely affect the trade-dependent nation. President Donald Trump recently indicated plans to impose tariffs of around 25% on automobile, semiconductor, and pharmaceutical imports, with an announcement expected soon.

The U.S. stands as Malaysia’s third-largest market for semiconductor exports, and the imposition of tariffs could significantly disrupt trade relations. As Malaysia navigates these challenges, the partnership with Arm Holdings could serve as a vital catalyst for the country’s semiconductor ambitions.

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