Malaysia has become a hot spot for chip manufacturing due to increasing tensions between the U.S. and China, especially around the development of semiconductors used for AI applications. Predictably, tech firms around the world have been looking to diversify their source of chips, and ARM Holdings is now hoping to make the most of this opportunity.
The SoftBank-backed chipmaker said on Wednesday that it has signed an agreement with the Malaysian government to bolster the country’s chip design ecosystem.
As part of the deal, Reuters reports that Malaysia will pay ARM $250 million over 10 years to buy its chip designs and technology for local manufacturers. Specifically, the country will buy IP, including seven of ARM’s chip design blueprints, Reuters cited Economy Minister Rafizi Ramli as saying.
ARM said the partnership will also see the company training 10,000 engineers in Malaysia on its technology.
ARM declined to comment on the $250 investment from the Malaysian government. A representative of the Malaysian government did not respond to a request for comment ahead of publication.
The move is the latest of Malaysia’s ongoing efforts to become a hub for chip manufacturing within the next decade. Earlier this year, Malaysia said it planned to manufacture its own GPUs to meet demand for AI and data centers.
The Malaysian government said last May that it would set aside at least $5.3 billion in financial support and train 60,000 engineers for its National Semiconductor Strategy (NSS), under which the country will seek to enhance its current infrastructure, develop an advanced chip supply chain, and attract top global clients.
Malaysia 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 that cited the Malaysian Investment Development Authority (MIDA).
In 1972, Intel established its first production facility outside the U.S. in Penang, Malaysia, investing $16 million in an assembly site. The U.S. chip giant in December 2021 said it would invest more than $7 billion to establish a chip assembly and testing factory in the country, and it’s also building its largest 3D chip packaging facility in Malaysia. GlobalFoundries, the U.S. chip company, also opened a new hub facility in Penang, Malaysia, in 2023, and Neways, a Dutch chip equipment maker, plans to build a new plant in Malaysia.
In addition, a number of tech giants, including Google, Microsoft, and Nvidia have announced billions of dollars in investments in Malaysia since 2023, primarily for data centers, AI development projects, and cloud services.