KUALA LUMPUR – Malaysia’s semiconductor exports to the United States are still free from retaliatory tariffs, for the time being, according to Investment, Trade, and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.
Responding to a question in the Dewan Rakyat, Tengku Zafrul explained that while the exemption is valid at present, it is subject to review and could change depending on the US government’s evolving trade policies.
“Currently, Malaysia’s semiconductor exports to the US are not subjected to the retaliatory tariffs. However, this exemption is conditional and may change depending on the US government’s evolving policies,” he said.
Tengku Zafrul’s comments were made in response to a query from Lim Guan Eng (PH–Bagan) regarding US President Donald Trump’s plans to impose 100% tariffs on semiconductors imported from countries that either do not produce or do not plan to produce chips within the US.
The report also indicated that only companies investing in or building semiconductor manufacturing facilities in the US would be exempt from the tariffs.
“This is a significant move that will undoubtedly affect major semiconductor-exporting countries like Malaysia,” Tengku Zafrul said.
He also highlighted that in April, the US Department of Commerce had launched an investigation under Section 232 of its Trade Expansion Act to determine whether imports of semiconductors and related products posed a national security threat to the US.
“Although the report was initially expected by the end of December, we’ve learnt that the timeline has been expedited. Preliminary findings from this investigation may soon form the basis for future policy decisions — including the possibility of higher tariffs,” he noted.
Tengku Zafrul clarified that while the US government has yet to announce the official mechanisms for implementing the tariffs, the exemptions could be focused on companies, rather than countries, that make direct investments in the US.
“Based on current information, the exemptions may not be based on countries, but on companies that invest directly in the US, regardless of where they are headquartered,” he said.
The potential impact on Malaysia would therefore depend on the investment strategies of multinational companies operating in the country, he added.
Tengku Zafrul also shared that Malaysia’s electrical and electronics (E&E) exports to the US amounted to RM119 billion in 2024, representing roughly 20% of the country’s total E&E exports. Of that, semiconductors accounted for RM60.6 billion, approximately 20% of Malaysia’s total semiconductor exports.
He further pointed out that 68% of Malaysia’s semiconductor exports to the US were from American companies based in Malaysia, which employ around 72,000 skilled workers in the country, supported by approximately 7,200 local suppliers, most of which are small and medium-sized enterprises (SMEs).
The government is also stepping up its outreach to local exporters and key players in the semiconductor supply chain, while encouraging companies to explore alternative markets.
“We are committed to monitoring this development closely and negotiating proactively. We want a clear understanding of what the US defines as ‘semiconductors’ in this context, so our industry can prepare appropriately,” Tengku Zafrul said. – August 7, 2025