Brazil at sweet spot for Malaysian semiconductor industry to de-risk supply chain – Tengku Zafrul

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RIO DE JANEIRO (Brazil): The largest South American country Brazil is strategically located for Malaysian semiconductor industry’s "Plus One” strategy to de-risk their supply chain resiliency.

Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz said it is more than just a precautionary measure.

"It’s a forward-thinking approach that will help Malaysian semiconductor companies not only de-risk their supply chains but also expand their reach to new markets,” he told the Malaysian media here on Monday.

So, many Malaysian companies who want to look at Latin America, Central America and North America, this is where they can find synergies, said Tengku Zafrul, who is part of Prime Minister Datuk Seri Anwar Ibrahim’s contingent on an official visit here.

"In terms of size, Brazil’s semiconductor industry is relatively small, but it is very advanced especially in integrated circuit (IC) design and some of the tools for integrated circuit design,” he explained.

Malaysia has a comprehensive semiconductor ecosystem and is strong in back-end and outsourced semiconductor assembly and test (OSAT) activities. Malaysia is currently the sixth largest semiconductor exporter globally with exports exceeding US$85 billion (RM380 billion).

On the other hand, Brazil’s semiconductor export value stands at US$1.2 billion (2022) with a competitive edge IC design.

Malaysia’s ecosystem includes global giants such as Intel, Infineon, Micron and Texas Instruments as well as homegrown champions like Carsem and Inari, known for their expertise in OSAT activities.

He said that by forging closer ties with Brazil or other regions, Malaysia can strengthen its position as a global semiconductor leader while ensuring that its industry is resilient, diversified and prepared for future challenges.

Asked about the possibility of disruption from the change of President in the United States, Tengku Zafrul said: "So far we have not received any information. President-elect (Donald Trump) will be sworn in on Jan 20, 2025.”

"At the same time, we are discussing with companies involved in the supply chain around the world, especially in strategic sectors such as semiconductors. We also need to hold engagement sessions with those companies to discuss with the United States, China and Europe how we can ensure that this supply chain continues to be strong.

"However, their concern is not in terms of the supply chain, but in terms of tariffs. During the recent election campaign, President-elect Trump said he wanted to raise tariffs in sectors such as semiconductors and other strategic sectors.

"Even though we don't know yet, we have to always be ready and engage with multinational and local companies. It is still early days,” he said.

"There are always pros and cons. The geopolitical tension was positive for Malaysia as countries like China and other countries took plus one strategy to ensure resilience of their supply chain, which ASEAN and Malaysia benefitted from.

"Especially the electrical and electronics (E&E) sector in Malaysia, which benefit most in the plus one strategy given the country has over 50 years of experience,” he said.

"But in the long term, if the tariff is increased, our concern is in terms of demand, the price will become expensive, so if it becomes expensive, consumption may decrease.”

"However, this is just an expectation," he added. "We don't know yet if this will happen or not.” - Bernama

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Brazil at sweet spot for Malaysian semiconductor industry to de-risk supply chain – Tengku Zafrul

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