The Malaysian government has entered into a US$250 million (RM1.11 billion) partnership with UK-based semiconductor design giant Arm Holdings plc, a move Prime Minister Datuk Seri Anwar Ibrahim described as the beginning of Malaysia's second semiconductor wave.

For decades, Malaysia has played a key role in chip testing and assembly at the back end of the semiconductor supply chain. Now, the country is looking to advance into chip design, aiming to strengthen its position at the front end with support from Arm, a subsidiary of SoftBank Group Corp.

"This collaboration with Arm marks a pivotal shift in Malaysia's approach to semiconductors and technology, shaping the nation's future," Anwar stated during his keynote address at the Malaysia Silicon Vision launch ceremony on Wednesday.

He further highlighted that the partnership sets the stage for Malaysia to develop its own AI (artificial intelligence) chips under the ambitious "Made by Malaysia" initiative. These chips will be designed, manufactured, tested, and assembled locally before being exported worldwide.

Key Aspects of the Partnership

Under the agreement, Arm will provide Malaysia with intellectual property (IP) licences and compute subsystems (CSS) for RM1.11 billion, payable over ten years. Additionally, Arm will earn royalties on the chips sold, although the exact royalty details remain undisclosed.

Anwar outlined three major components of the partnership:

In a significant milestone, Arm will also open its first office in the ASEAN region in Kuala Lumpur, further strengthening Malaysia's semiconductor ambitions.