Report: US-China trade deal could hand major blow to Malaysia, Taiwan semiconductor sector

Nikkei Asia said a formal trade deal would lead to China sourcing more semiconductor components from the US, among others. — Reuters pic
Nikkei Asia said a formal trade deal would lead to China sourcing more semiconductor components from the US, among others. — Reuters pic

KUALA LUMPUR, March 14 — Malaysia’s GDP may shrink by up to 0.7 per cent from lost semiconductor sales if thorny trade negotiations between US and China prove successful, Nikkei Asia reported today.

Citing a Goldman Sachs analysis of the trade agreement being negotiated between the two superpowers, it said a formal deal would lead to China sourcing more semiconductor components from the US, among others.

Taiwan would be even worse hit than Malaysia and may lose a full per cent of its total economic value as a result while South Korea and Japan both stood to lose around US$8 billion.

“Besides major chip producers, Malaysia, the Philippines and Singapore could also lose some chip business through US tech supply chains,” the report added.

Semiconductor as well as electronics and electrical (E&E) exporters contribute a significant portion to the Malaysian economy.

A decline in orders would be particularly felt in Penang where most such factories are located.

The US and China began engaging in a tariff war shortly after Donald Trump was elected as the former’s president, triggering a larger global economic slowdown.

Both countries are currently negotiating a trade deal to reverse some effects of the previous tariff moves in an attempt for a rapprochement.