Malaysia has entered into a deal to pay Arm Holdings $250 million over the next 10 years to acquire blueprints for the design of advanced chips, a significant step toward establishing a local semiconductor industry. The move is part of Malaysia’s broader strategy to produce its own chips, particularly graphics processing unit (GPU) chips, within the next five to 10 years, as demand surges for artificial intelligence (AI) technologies and data centers.
Economy Minister Rafizi Ramli announced the agreement on Wednesday, highlighting that the Malaysian government will purchase Arm’s intellectual property (IP), including seven of its high-end chip designs. These plans are expected to empower local manufacturers to scale up production and increase domestic chip production capacity.
As part of the agreement, the government will also invest in developing local talent by training 10,000 engineers. This initiative aims to strengthen Malaysia’s position in the fast-growing semiconductor sector and equip its workforce with the skills required to design and produce advanced chips.
In addition to acquiring the designs, Malaysia hopes to foster the creation of 10 local chip companies, each with annual revenues between $1.5 billion and $2 billion. To ensure the success of this venture, both the Malaysian government and Arm will implement selection criteria to identify capable local companies with the potential to rapidly begin production.
Rafizi stated that the goal is for the selected firms to leverage the intellectual property acquired from Arm to establish a robust domestic chip manufacturing sector. “We hope this partnership will help our local manufacturers scale up production and capture a larger share of the growing global demand for AI-related hardware,” he added.
The deal also follows a broader trend in Malaysia’s technology sector, with major tech companies, including Microsoft, Nvidia, Alphabet’s Google, and China’s ByteDance, making substantial investments in the country’s digital infrastructure. These investments are primarily focused on cloud services and data centers, sectors that are integral to supporting the increasing demand for AI technologies.
In line with its ambitious plans, Malaysia’s government announced in 2023 that it would build Southeast Asia’s largest integrated-circuit (IC) design park. The government aims to attract global tech companies and investors with incentives such as tax breaks, subsidies, and visa fee exemptions. Prime Minister Anwar Ibrahim noted that the park will host world-class anchor tenants, including Arm, and collaborate with international firms to boost the country’s semiconductor capabilities.
By positioning itself as a regional hub for chip design and manufacturing, Malaysia is poised to take advantage of the AI boom and strengthen its role in the global tech supply chain.
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