KUALA LUMPUR: A portion of Malaysia’s semiconductor exports may qualify for exemptions from the United States’ 100 per cent tariff on imported chips, according to CIMB Treasury and Markets Research.
Its head of research Michelle Chia and senior economist Azhar said this reflects the presence of US firms and other multinationals that depend on Malaysia’s chip supply chain and have ongoing or planned capital investments in the US.
“The 65 per cent of Malaysia’s semiconductor exports to the US that originate from US firms operating locally, and a portion of the remaining 35 per cent from firms with US affiliations, may still qualify for exemptions,” they said in a note.
However, they said if tariff implementation is worse than the base case of 65 per cent exemptions, every additional 10 per cent of semiconductor exports affected could translate to a 0.29 per cent drag on the gross domestic product.
They added that in the short term, the US may need to recognise the complexity of the semiconductor supply chain and production relocation will take a considerable amount of time.
“We also believe that the US administration will be mindful of the potential impact of elevated tariffs on corporate earnings and consumer prices.
“Over the longer term, however, companies may be compelled to relocate production, potentially impacting investment decisions in the future,” they said.
US President Donald Trump on Thursday has threatened to impose a 100 per cent import tariff on semiconductors, with exemptions for US companies relocating production back to the US.
In response, the Investment, Trade and Industry Ministry (Miti) said 65 per cent of Malaysia’s semiconductor exports to the US originate from US firms operating locally.
The ministry also acknowledged that the exemption for semiconductor products is still subject to an ongoing investigation by the US Department of Commerce.
Notably, Malaysia exported RM437.5 billion worth of semiconductor products globally, with RM56.2 billion destined for the US in 2024.
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