U.S. Trade Policy Emerges as Key Uncertainty
Malaysia’s technology sector faces heightened uncertainty heading into 2026 as analysts warn that potential U.S. sectoral tariffs on semiconductors could weigh heavily on earnings. According to a recent report by Ta Securities, policy risks linked to Donald Trump remain a major overhang despite otherwise favorable industry fundamentals.
The concern centers on whether the United States will impose broad tariffs on semiconductor imports, a move that would disproportionately affect export-oriented economies like Malaysia.
Malaysia’s Heavy Exposure to U.S. Semiconductor Trade
Malaysia exported roughly MYR 120 billion worth of electrical and electronic products to the United States in 2024, accounting for about one-fifth of total E&E exports. Semiconductors alone made up MYR 60.6 billion of that figure, underscoring the sector’s strategic importance in bilateral trade.
Analysts caution that a significant tariff could disrupt supply chains, weaken demand, and pressure margins for Malaysian manufacturers that rely heavily on U.S. customers.
Possible Buffers Against Tariff Impact
Despite the risks, Ta Securities believes the fallout may be manageable. Many U.S.-based multinational corporations operating in Malaysia have the capital flexibility to invest domestically in the United States if required, potentially mitigating tariff effects.
The research house also noted that exemptions could be expanded, given the complexity and deep interdependence of global semiconductor supply chains.
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AI Demand Drives Global Semiconductor Growth
Looking beyond trade risks, the broader semiconductor outlook remains robust. Citing the World Semiconductor Trade Statistics Organization, Ta Securities said global chip sales are projected to reach $975.5 billion in 2026, representing a 26.3% year-on-year increase.
Growth is expected to be led by logic and memory chips, fueled by artificial intelligence applications and continued expansion in data centers and high-performance computing.
Mixed Signals Across End Markets
Demand trends vary across consumer segments. Personal computing shipments are forecast to grow 5.6% in 2025, driven largely by the Windows 10 migration cycle, with longer-term growth expected to average 1.5% annually.
Automotive demand is also expected to rise modestly in 2026, particularly in developing markets. However, smartphone shipments are projected to decline due to memory shortages and price sensitivity in lower-end devices.
National Semiconductor Strategy Gains Momentum
Malaysia’s National Semiconductor Strategy (NSS) remains a key pillar supporting long-term industry development. Since its launch in 2024, the strategy has attracted nearly MYR 55 billion in investments, enabled the creation of local integrated circuit design firms, and generated tens of thousands of skilled jobs.
A landmark collaboration with Arm Holdings, involving a $250 million investment over ten years, aims to accelerate Malaysia’s chip design capabilities and move the country up the value chain.
Cautious Optimism Into 2026
While AI-driven global growth offers tailwinds, analysts remain cautious. Many Malaysian tech firms still depend heavily on legacy industrial and automotive segments, with limited exposure to higher-margin AI products.
Ta Securities concludes that trade policy decisions in Washington will be a critical determinant of whether Malaysia’s technology sector fully capitalizes on global semiconductor growth in 2026.
