Contained downside of 'substantial' US tariffs for Malaysian chipmakers

By NST in September 16, 2025 – Reading time 2 minute

KUALA LUMPUR: Malaysia’s semiconductor industry may be spared the worst of potential US tariffs after President Donald Trump threatened to impose “fairly substantial” duties on imports, according to TA Securities.

Despite Malaysia’s position as one of the world’s top six semiconductor exporters, the firm said the downside could be cushioned as most shipments to the US are tied to American multinationals operating in Malaysia.

The country exports accounting for roughly 7.0 per cent of global shipments and about 13 per cent of the global assembly, testing and packaging market.

In 2024, it exported around RM120 billion worth of electrical and electronic (E&E) products to the US, representing around 20 per cent of total E&E exports.

Semiconductors made up RM60.6 billion of that figure, highlighting the sector’s strategic role in Malaysia–US trade.

“Against the backdrop of looming tariffs, we believe the impact will likely be less severe than initially anticipated, as roughly 65 per cent of Malaysia’s semiconductor exports to the US come from American firms operating in Malaysia, which could be eligible for exemptions,” it said in a note.

Trump has floated tariffs of up to 300 per cent but indicated that exemptions may apply to companies relocating production to the US or investing in domestic facilities.

The US Department of Commerce is still conducting a Section 232 investigation into semiconductor imports on national security grounds and its findings are expected to shape the tariff framework.

TA Securities said listed firms under its coverage — Inari Amertron Bhd, Unisem (M) Bhd and Malaysian Pacific Industries Bhd — have limited direct US exposure.

This is because most of their products are supplied to intermediate customers, who subsequently integrate the components into modules or finished products before exporting to another locations.

The firm said Semiconductor Industry Association data showed that worldwide sales rose 20.6 per cent year-on-year to US$62.1 billion in July 2025.

This extends growth for a 21st consecutive month on robust demand for artificial intelligence and high-performance computing.

However, despite minimal direct exposure, TA Securities said these companies could still face indirect headwinds should overall end-demand soften due to the imposition of hefty tariffs.

“While global semiconductor sales are projected to continue growing, we maintain a cautious outlook given the lingering uncertainties surrounding US trade policy.

“On the domestic front, we expect the Malaysian government to remain committed to the National Semiconductor Strategy, which aims to strengthen the country’s position in the global semiconductor value chain,” it added.

TA Securities maintained its “Neutral” stance on the sector, with a “Buy” call on Elsoft Research Bhd (target price 34 sen), “Hold” on Inari (TP: RM2.11) and “Sell” on Unisem (TP: RM2.60) and MPI (TP: RM27.20).

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