Malaysia’s semiconductor exports are surging—chipmaking equipment rose 71.1% and finished semiconductors 84.1% in 8M26—fuelled by strong AI-driven demand and foreign investment into higher-value manufacturing, positioning Malaysia with a 6.5% share of global semiconductor-related exports and comparative advantages across wafers, equipment and finished products; however, the sector faces significant risks from potential renewed US protectionism (including possible tariffs following a U.S. probe into excess capacity) and geopolitical tensions in West Asia that could raise input and fuel costs, creating uncertainty that complicates investment and relocation decisions despite current exemptions from the 10% Section 301 forced‑labour tariff.
Semiconductor sector poised for continued expansion
