KUALA LUMPUR, 3 November 2025 — Malaysia is embracing a “neutral and inclusive” approach to secure its place in the global artificial intelligence (AI) and semiconductor ecosystem, says Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz. The strategy positions the country to maintain access to both U.S.- and China-origin AI-chips and platforms while safeguarding national data and technology sovereignty.
Balancing Global Tech Access with Sovereignty
In Parliament, Zafrul answered a question regarding how Malaysia intends to ensure that local industries can access AI-chips from major producers in the U.S. (such as Nvidia) and China (such as Huawei Technologies Co., Ltd.’s Ascend range). He reiterated that the government’s objective is to enable controlled, competitive and secure access for Malaysian firms, while maintaining data sovereignty and cybersecurity protections.
Zafrul highlighted several key initiatives underpinning this policy:
- The U.S.–Malaysia Memorandum of Cooperation on Resilient Semiconductor Supply Chains, signed in 2022 and valid until 2026, is being leveraged to enhance Malaysia’s domestic semiconductor resilience.
- Malaysia is adopting “layered regulatory and technical” frameworks to evaluate AI and chip products deployed in critical infrastructure, involving approval mechanisms and risk assessments by national cybersecurity agencies.
- Strategic collaboration deals with major IP-holders: for example, Malaysia’s agreement with Arm Limited to access its intellectual-property footprint accelerates the country’s ambitions in local chip-design and AI-hardware development.
Moving Up the Value Chain
Zafrul also pointed to Malaysia’s wider ambition to transition from being a manufacturing base mainly for assembly and test, into higher-value activities such as IC (integrated circuit) design, advanced packaging and R&D for AI-hardware. The neutral strategy allows the country to engage with multiple global technology blocs, reducing reliance on any one side in the evolving U.S.–China tech competition.
Why This Matters for Asia-Pacific Tech
For Malaysia and the broader Asia-Pacific region, this policy stance has several implications:
- By staying outward-facing and open, Malaysia positions itself as a potential bridge between major technology powers, a role that could attract investment, technology transfers and regional supply-chain hubs.
- The layered regulatory approach signals to multinationals that Malaysia is mindful of the security and export-control regime, but also receptive to advanced-tech engagement.
- For local companies in Malaysia’s electrical & electronics (E&E) and semiconductor sectors, the strategy opens opportunities to engage either with U.S.-origin or China-origin technology ecosystems, depending on market and regulatory dynamics.
- At the same time, the policy underscores the importance of building local capability, because access alone may shift with geo-technology dynamics, and Malaysia aims not just to import but to innovate.
Key Challenges Ahead
While the policy is clear, execution will involve navigating some hurdles:
- The global semiconductor and AI-hardware space is increasingly framed by narrower export-controls, sanctions and dual-use risk. Maintaining access to both U.S. and Chinese technologies demands agile legal, regulatory and commercial frameworks.
- Local industry must scale up rapidly in design, advanced packaging and IP development if Malaysia is to move beyond being a “contract manufacturer” to a creator of global-grade AI hardware.
- Ensuring that technology access is matched with talent-development, data-governance, and infrastructure investments (e.g., high-performance networks, data centres) will determine whether this strategy pays off in long-term competitiveness.
