British chip firm deal to boost Malaysia's semiconductors

LONDON

British chip giant ARM Holdings was set to sign an agreement on Wednesday with Malaysia to help boost the country's efforts to produce high-end semiconductors, the economy minister said.

Malaysia is a key player in the increasingly vital chips sector, but it has been largely focused on packaging, assembly, and testing services—the lower end of the market.

The agreement will see Softbank-owned Arm provide chip designs and other technology, helping Malaysia to move into more value-added production such as wafer fabrication and integrated circuit design.

The Southeast Asian nation is paying $250 million over a decade to receive support from the British company, journalists were told at a ministry briefing.

"We have always wanted to move from the back end—which is on testing and assembly—to the front end," Malaysian Economy Minister Rafizi Ramli told Bloomberg Television.

The deal will put Malaysia "ahead of other countries," making it ARM's "main hub in ASEAN," a spokesman from the prime minister's office said, referring to the Southeast Asian bloc.

Tensions between Washington and Beijing over advanced tech, especially semiconductors, in recent years have forced many firms to look into relocating their manufacturing from China to other countries, including Malaysia, Vietnam, and India.

A prominent player in the industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech firm Bosch.