A Country’s ‘Radical Approach’ to Chip Production Includes New $250M Deal

With an eye toward boosting Malaysia beyond chip assembly and into more lucrative semiconductor production, Arm Holdings Plc will provide the Southeast Asian country with chip designs and technology. The Malaysian government will pay the Softbank Group-owned Arm $250 million over a 10-year period for semiconductor-related licenses and access to intellectual property.

Deal includes training 10,000 chip engineers

The plan is to enable Malaysian companies to design their own chips with the goal of exporting $1.2 billion in semiconductors by 2030. Malaysia’s semiconductor industry has traditionally focused on midstream and downstream operations.

The terms of the deal include Arm training 10,000 chip engineers and providing support toward the development of locally designed semiconductor products, Prime Minister Anwar Ibrahim said in a speech.

Arm will open its first Southeast Asian office in Kuala Lumpur to enhance its regional presence, including in Australia and New Zealand, according to Ibrahim.

See: Boosting R&D Could Lift Australia’s GDP by 3%, Report Finds

Shifting focus to build ‘the whole ecosystem’

Malaysia joins an increasing number of countries trying to build domestic production of a component that is critical to future technologies. As of November 2024, it is the sixth-largest exporter of semiconductors globally, accounting for 13% of the chip assembly, testing, and packaging market.

Intel Corp. and Infineon Technologies AG are major players in the country and have operations that primarily focus on chip production.

“We have always wanted to move from the back-end — which is on testing and assembly — to the front-end,” Malaysian Economy Minister Rafizi Ramli told Bloomberg Television’s Haslinda Amin on Wednesday. “The government has taken a radical approach” to work with Arm “with the perspective of building the whole ecosystem.”

Malaysia has become a destination for many tech companies seeking to diversify away from China, which is facing escalating tariffs under the Trump administration. However, Malaysian officials are concerned that the wide-ranging tariffs could impact the trade-dependent nation.

See: Trump’s Import Tariffs: How They’ll Shake Prices, Jobs, and Trade

The U.S. has similar goals

The U.S. is also trying to revive domestic semiconductor manufacturing. Taiwan Semiconductor Manufacturing Company (TSMC) will spend $100 billion in the U.S. over the next four years to expand its production capacity, President Trump said Monday. This is in addition to $65 billion in investments TSMC, the world’s largest semiconductor manufacturer, has previously announced. The company has already begun building three plants in Arizona.

Chinese tech giants Alibaba, ByteDance, and Tencent are increasing purchases of scaled-down NVIDIA chips to power generative AI models like DeepSeek-R1, alleviating concerns over decreasing demand for U.S. hardware.