FMM

THE Federation of Malaysian Manufacturers (FMM) has raised concerns over the US proposed move to impose a 100% tariff on imported semiconductor chips — a development that could pose significant challenges for American semiconductor companies operating in Malaysia and potentially disrupt global supply chains.

The tariff, announced with exemptions only for companies that manufacture or are planning to manufacture within the US, has created uncertainty among manufacturers in Malaysia, especially US-based firms that have long relied on the country as a trusted base for global supply and exports to the American market.

“Malaysia is globally recognised as a leading hub for semiconductor assembly, packaging, and testing, contributing an estimated 13 percent of global backend semiconductor output,” FMM said in a statement today.

“Semiconductors were previously excluded from US reciprocal tariffs, and this proposed policy shift has raised immediate concerns among manufacturers, many of whom are seeking urgent clarification on whether their Malaysia-based operations will now fall within the scope of the new measure.”

FMM welcomed a recent assurance by the Minister of Investment, Trade and Industry that some US firms operating in Malaysia may be exempt, but stressed that “clear and timely guidance is critical to maintaining investor confidence and avoiding disruption to supply chains that are deeply integrated with the US and global markets.”

The group said it continues to support efforts that enhance industry understanding of the US market and investment environment.

“In collaboration with the US Embassy, FMM recently organised a briefing session with the Export-Import Bank of the United States to inform Malaysian companies of available financing and incentives for establishing operations in the US. We are also engaging with US counterparts to help Malaysian manufacturers explore market access opportunities, build strategic partnerships, and strengthen supply chain connectivity,” it added.

At the policy level, FMM urged the government to enhance support for both domestic and outward investment strategies to secure Malaysia’s long-term competitiveness in the global semiconductor industry.

“The National Semiconductor Strategy, which is currently being implemented, must be driven forward with greater urgency and focus, particularly in enhancing investment in integrated circuit design, advanced packaging, wafer fabrication, research and development, and talent development,” it said.

“In parallel, companies considering expansion into the US or other markets require dedicated facilitation to support their internationalisation efforts. Establishing operations abroad is complex and capital-intensive, requiring time, expertise, and sustained institutional backing.”

To that end, FMM called for targeted support measures such as regulatory facilitation, specialised advisory services, bilateral engagement to ease market entry barriers, and access to financing mechanisms to help reduce investment risk and cost.

“These measures are critical to help Malaysian manufacturers respond effectively to shifting global trade dynamics without being forced to relocate core operations,” said FMM president Tan Sri Dato’ Soh Thian Lai.

“With the right support, companies can retain and grow high-value activities in Malaysia while expanding strategically where needed. FMM remains committed to working closely with the government and our international partners to ensure that Malaysia’s position as a competitive, reliable, and trusted hub in the global semiconductor and manufacturing ecosystem is not only safeguarded but continuously strengthened.” — TMR

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