Goh Lim Thye of Universiti Malaya said these companies should diversify and expand their exports to high-growth markets like the European Union (EU), Asean and India to reduce dependency on the US market.
“The European Chips Act, which aims to increase the EU’s semiconductor production to 20% by 2030, presents an opportunity for Malaysian exporters to strengthen ties with European tech firms,” he told FMT.
Last week, US President Donald Trump said he intends to impose auto tariffs “in the neighbourhood of 25%” and similar duties on semiconductors and pharmaceutical imports, the latest in a series of measures threatening to upend international trade.
Known as the “Silicon Valley of the East”, Penang is home to major US semiconductor companies like Intel, Broadcom and Micron, and has recently attracted several Chinese firms as well.
However, chief minister Chow Kon Yeow said Penang’s solid economic foundation, built over the last five decades, puts the state in a strong position to withstand any of Trump’s tariff policies.
Many Malaysian semiconductor firms have historically relied on China for certain components, but China has been among the first to face increased tariffs.
Goh said another strategy is to strengthen Penang’s position as a key destination for companies establishing additional sourcing and manufacturing operations beyond China, a move commonly known as the “China Plus One” strategy.
He said this allows firms to diversify their supply chains while maintaining tariff-free export access to key markets.
“Additionally, investing in local supplier ecosystems will reduce dependency on imported semiconductor-grade chemicals and components,” he said.
Harald Sippel, an executive director of ESG Malaysia, said the Penang government should focus on maintaining and enhancing a business-friendly environment.
He said this means ensuring infrastructure, workforce readiness, policy stability and trade facilitation rather than providing financial incentives, which may not be feasible due to cost constraints.
“However, for small and medium enterprises (SMEs) who might not have a contingency plan when Trump’s tariffs come into effect, these companies should receive guidance from the state government on sanctions and trade risks, assisting them in finding alternative markets,” said Sippel.