ARM to sign $250M chip deal with Malaysia

ARM signs $250M chip deal with Malaysia, targeting AI growth.

: ARM Holdings, supported by SoftBank, has signed a $250 million agreement with Malaysia to enhance its chip design capability over the next 10 years. As part of the deal, ARM will provide chip design technology and train 10,000 Malaysian engineers to strengthen the local semiconductor industry. This initiative is part of Malaysia's strategy to become a semiconductor production hub, with an investment exceeding $5.3 billion. Major tech firms like Intel, Google, Microsoft, and Nvidia are also heavily investing in the country.

In recent developments, ARM Holdings has entered a significant $250 million partnership with the government of Malaysia, focusing on bolstering the chip design ecosystem within the country. The agreement, expected to span ten years, encompasses the procurement of ARM's chip designs and technology by Malaysian manufacturers, marking an essential step in strengthening Malaysia’s position in the semiconductor industry. This support involves acquiring intellectual property, including seven of ARM's detailed chip blueprints, as confirmed by Rafizi Ramli, Malaysia’s Economy Minister.

This collaboration is anticipated to have a transformative impact, as ARM will also facilitate the training of 10,000 engineers in Malaysia on ARM technologies. Despite the high financial commitment, ARM has been reticent in commenting on the specific investment aspects relating to the Malaysian government, and no comments have been forthcoming from Malaysian representatives regarding the financial particulars before publication.

The ARM deal aligns with Malaysia's strategic objectives to become a preeminent semiconductor hub in the next decade. Earlier ambitions unveiled by the Malaysian government included manufacturing its own Graphics Processing Units (GPUs) to satisfy the growing demand from sectors reliant on AI and data centers. In May, commitments were made to allocate over $5.3 billion in financial backing and develop a specialized workforce as part of the nation's National Semiconductor Strategy (NSS), which aims to fortify the existing technology infrastructure and foster a superior chip supply chain to attract premier global clientele.

Malaysia's involvement in the semiconductor sector dates back over 50 years, currently accounting for approximately 13% of global services in chip testing, assembly, and packing, according to TrendForce. The influence of international stakeholders, such as Intel, is historically significant; Intel set up its first non-U.S. production site in Penang in 1972, with recent moves including over $7 billion in new investments for chip assembly and testing facilities, as well as the development of a large-scale 3D chip packaging unit in Malaysia.

Contributing to Malaysia's semiconductor ascendancy, prominent technology firms, such as Google, Microsoft, and Nvidia, have dedicated billions towards expansion efforts, which include projects focused on data centers, AI enhancements, and cloud services since 2023. The growing ecosystem underscores Malaysia's prowess and ambitions in semiconductor manufacturing, further strengthened by ARM Holdings’ recent strategy to expand and enhance the local technological landscape.

Sources: Reuters, TrendForce, Malaysian Investment Development Authority (MIDA)

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