Trump’s Chip Tariffs Could Fry Malaysia’s Semiconductor Edge

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Donald Trump’s latest tariff plan is less about trade and more about throwing a grenade into the global semiconductor industry. The US president wants to slap up to 300 per cent tariffs on imported chips—a move that could easily send shockwaves through Malaysia’s RM60.6 billion semiconductor export sector.

Chips power everything from iPhones and laptops to medical devices and cars. When tariffs spike this high, it’s not only US consumers who pay more—it’s the entire supply chain, and that includes Malaysia.

According to Tsung Ming Chung, a Malaysian who has spent nearly two decades with Dutch chipmaking giant ASML, the tariffs could hit Malaysia especially hard. Speaking to Bernama yesterday (18 August 2025), he warned that the move could even cause parts of the industry to “grind to a halt,” as non-US producers would bear the brunt of the cost.

Tsung pointed out that Intel’s Penang operations, for example, could be forced to pay the tariff just to ship chips back to the US—an absurd scenario where American companies overseas get penalised for supplying their own market.

Malaysia isn’t a minor player here as the country employs more than 72,000 skilled workers and sustains 7,200 local suppliers, many of them SMEs, to keep its semiconductor ecosystem running. While Malaysia may not be at the bleeding edge like Taiwan, it remains a critical link, particularly in automotive and industrial chips.

Tsung also cautioned that ordinary consumers won’t escape the fallout. “If Taiwan is manufacturing iPhones and they are importing them back to the US, your iPhone is going to cost more not only in the US, but everywhere in the world,” he said.

The bigger picture is ASEAN’s. Tsung urged Southeast Asia to stop being a pawn in the US-China trade spat and start building a regional semiconductor ecosystem. With Malaysia’s packaging capacity, Singapore’s capital and Vietnam’s workforce, ASEAN already has the pieces in place—what’s missing is coordination and investment.

For Malaysia, that means companies like Silterra could play a bigger role if fabs are upgraded and talent pipelines strengthened. Tsung suggested closer cooperation with Europe, particularly the Netherlands, as another way to reduce dependence on Washington and Beijing’s trade tantrums.

Trump’s tariff tantrum doesn’t just threaten US trade, but risks undercutting Malaysia’s semiconductor backbone and making gadgets globally more expensive. If ASEAN doesn’t start playing offence instead of defence, we’ll keep paying the price for someone else’s trade war.