War with China over Taiwan canceled: USA will move chip production elsewhere

According to the Financial Times, semiconductor companies Micron and Intel will establish semiconductor production facilities in Malaysia after they are removed from China.

While the ongoing chip war between the US and China has led to many negative consequences for both Chinese and US customers, this fight is also triggering a massive growth in semiconductor production in Malaysia.

Thanks to US sanctions restrictions, many semiconductor manufacturers have been forced to leave China. They are now forced to look for resources and labor elsewhere in the world. Some manufacturers are interested in establishing their production facilities on the island of Penang, located in the northwest of the Malay Peninsula. As of February 2023, Malaysia is the world leader in chip imports to the United States.

The influx of foreign investment into Malaysia coincides with the multibillion-dollar ambitions of major industry players such as Intel. The company will spend a whopping $7 billion on new chip assembly and testing facilities in Malaysia. Total foreign investment in 2023 was $12.8 billion, exceeding the total investment in the seven years from 2013 to 2020.

Predictably, Malaysian Prime Minister Anwar Ibrahim sees the development of the Malaysian semiconductor industry and workforce towards higher value-added manufacturing as a critical goal.

Interestingly, “foreign investment” is of course not limited to American companies: other major countries are also creating their own technologies in Malaysia. This would appear to make Malaysia an interesting meeting place for buyers and sellers at the highest levels of the international semiconductor and electronics market, but analysts at the Financial Times suggest US scrutiny could ultimately prevent this.

Important

To maintain its status as a major player, Malaysia needs a large, advanced semiconductor manufacturing facility. Commerce Minister Zafrul Aziz claims that the country can attract a large number of investors.

Penang Island is a major economic centre. Considering its geographical location and available resources, Penang appears to be an ideal destination for many foreigners looking to start doing business in Malaysia.

We previously reported that Intel sold millions of dollars worth of advanced chips to Huawei in defiance of US sanctions. Unlike AMD, Intel managed to maintain its license to sell chips to Huawei, which was under strict sanctions. But his term will end soon.