$INARI (0166.MY)$    Market rumors say the US will "clean up...

$INARI (0166.MY)$   
Market rumors say the US will "clean up Southeast Asia" as trade war escalates, hurting semiconductor industry

(Kuala Lumpur, 2nd) Experts believe that no matter who the new US president is, the Sino-US trade war is expected to escalate further. The market even expects that a "cleansing of Southeast Asia" operation may be launched. The semiconductor industry and data center industry may be affected. Malaysia is urged to prepare in advance to deal with stricter US tariff measures.
The US-China trade war has pushed Southeast Asian countries to benefit from the "China + 1" strategy, where companies have diversified their supply chains to avoid US tariffs on Chinese goods. As a result, Malaysia has attracted a large number of international semiconductor companies, data center operators and other technology companies from the East and the West to invest.
However, recent US tariffs amid the US-China trade war and competition in artificial intelligence (AI) have unnerved Malaysian businesses. Such tariffs are known as “Southeast Asia cleansing” and are aimed at Chinese companies that mask the origin of their products by moving operations to Southeast Asian countries.
Experts told Singapore's Channel NewsAsia (CNA) that the United States' protectionist policies will continue to intensify, especially if former President Trump wins the presidential election on November 5, and Malaysia may need to prepare for tougher tariff measures like its neighbors such as Vietnam, Thailand and Cambodia.
The report said that the United States began to impose tariffs on solar imports from the above four countries this month. These countries have companies with Chinese factories and operations, such as JinkoSolar, Risen Technology and Trina Solar.
Subsequently, on October 29, the US government announced that it had established restrictions on US individuals and companies investing in China's advanced technologies (such as semiconductors, quantum computing and artificial intelligence).
The restrictions will prohibit investments in certain industries and require reporting of investments in others to the U.S. government, with the goal of limiting China’s access to high-end chips and other advanced technologies that could help it gain a military advantage.

Dato’ Sri Wang Shoutai, President of the Malaysian Semiconductor Industry Association (MSIA)
Wang Shoutai: Malaysia's semiconductor industry may stagnate
Malaysian Semiconductor Industry Association (MSIA) president Datuk Seri Wong Siew Tai said the country’s semiconductor industry could “soon” face stagnation due to US restrictions.
"These Chinese companies want to ensure that their products sell well and plan to sell them to the global market... But now this kind of 'Sinophobia' in the United States has nothing to do with national security."
Malaysia's semiconductor industry has also benefited from the "China + 1" strategy. In addition to attracting billions of dollars in investment from giants such as Intel and Infineon, this year it also received plans from three Chinese companies, Wafer Level CSP, Ningbo SJ Electronics and Wuxi AMTE, to invest US$100 million (about RM437.5 million) in Penang.
Ong said Malaysia must get used to US restrictions and tariffs: "Because it has started and it will not stop."
Chinese companies in Malaysia will not stop operating
However, he does not think Chinese semiconductor companies in Malaysia, such as TF AMD Microelectronics, which has built a RM2 billion factory in Penang, will cease operations due to potential sanctions.
“I don’t think they’re going to back off and change where they operate because this situation persists wherever they move to.”
Malaysia currently accounts for 13% of global chip testing and packaging. In May this year, the United States indicated that it would increase tariffs on Chinese semiconductors from 25% to 50% by 2025 as one of the measures to increase domestic semiconductor production capacity in the United States.