Malaysia has emerged as a hotspot for chip manufacturing, capitalizing on the increasing tensions between the US and China, particularly in the development of semiconductors used for AI applications. In a significant move, ARM Holdings, a SoftBank-backed chipmaker, has signed an agreement with the Malaysian government to bolster the country's chip design ecosystem.

As part of the deal, Malaysia will pay ARM $250 million over 10 years to buy its chip designs and technology for local manufacturers. Specifically, the country will acquire intellectual property, including seven of ARM's chip design blueprints, according to Economy Minister Rafizi Ramli. This partnership is expected to have a significant impact on Malaysia's chip manufacturing capabilities, as the country aims to become a hub for chip manufacturing within the next decade.

The agreement also includes ARM training 10,000 engineers in Malaysia on its technology, further solidifying the country's position in the global chip manufacturing landscape. Although ARM declined to comment on the $250 million investment from the Malaysian government, the move is seen as a strategic step towards diversifying the global chip supply chain.

Malaysia's efforts to become a hub for chip manufacturing are not new. The country has been involved in the chip industry for over 50 years and currently provides about 13% of global chip testing, assembly, and packing services, according to a report by TrendForce. In 1972, Intel established its first production facility outside the US in Penang, Malaysia, investing $16 million in an assembly site. Since then, the country has attracted significant investments from global chip giants, including Intel, GlobalFoundries, and Neways.

In addition to chip manufacturing, Malaysia has also become a hub for data centers, AI development projects, and cloud services. Tech giants such as Google, Microsoft, and Nvidia have announced billions of dollars in investments in the country since 2023. The Malaysian government has committed to providing at least $5.3 billion in financial support and training 60,000 engineers as part of its National Semiconductor Strategy (NSS).

The NSS aims to enhance Malaysia's current infrastructure, develop an advanced chip supply chain, and attract top global clients. With the ARM partnership, Malaysia is poised to take a significant leap forward in achieving its goal of becoming a major player in the global chip manufacturing industry. As the US-China tensions continue to shape the global tech landscape, Malaysia's strategic move is likely to have far-reaching implications for the industry.

In conclusion, Malaysia's emergence as a key player in global chip manufacturing is a significant development in the tech industry. As the country continues to attract investments from global chip giants and tech companies, its position as a hub for chip manufacturing is likely to solidify. The ARM partnership is a crucial step in this direction, and it will be interesting to see how Malaysia's chip manufacturing industry evolves in the coming years.