Trump's tariffs hinder Malaysia's plan to prepare for the AI

The Intel Factory is located in the same neighborhood as that of AMD, a rival chip maker. A quick drive away is a system built by HP. They are all part of a large building view that causes the Silicon Valley but is in Malaysia.

American companies started to open manufacturing facilities in the state of Penang in Malaysia over five decades ago. The partnership has created tens of thousands of jobs and was a lucrative industry for Malaysia, which has become a crucial tooth catcher in the global technical manufacturing industry. It is one of the largest sources for semiconductors that are exported to the United States and can be sent to components from dollars in laptops, telephones, cars, toys and medical devices.

Now, like so many places that have progressed thanks to international trade, Malaysia has been caught in the joints of President Trump's tariffs.

Until recently, Malaysia was viewed as a beneficiary of Washington's wish to keep advanced chips out of China's hands. Thinking was that companies were able to isolate themselves from the intensifying US China rivality by relocating the company to Malaysia. The hopes were so high that Prime Minister Anwar Ibrahim set an ambitious goal last year to prepare Malaysia for the construction of high-tech chips used in AI.

This plan could be undermined by Mr. Trump's chaotic trade policy that the industry guessed. Last month, his government imposed all Malaysian exports to the United States. These tariffs were soon put on ice. The two countries are unclear in negotiations, but all Malaysian goods are subject to a 10 percent basic tariff that has imposed Mr. Trump.

However, the President said that he also consider a flat rate of at least 25 percent for all semiconductor imports and argues that these imports could endanger the national security of the United States. He seems to be obliged to bring more chip production back to the USA, said Julia Goh, a senior economist at UOB, a regional bank based in Singapore.