By Danial Azhar
KUALA LUMPUR (Reuters) -Malaysia will pay Arm Holdings $250 million over 10 years to acquire the firm’s chip design plans for local manufacturers, the government said on Wednesday as it looks to produce its own chips within the next decade amid an AI boom.
The Southeast Asian nation plans to produce its own graphics processing unit chips in the next five to 10 years as demand for artificial intelligence and data centres grows.
Prime Minister Anwar Ibrahim said the agreement with Arm will allow Malaysia to design, manufacture, test and assemble AI chips to be sold globally.
Arm will also establish its first Southeast Asian office in Malaysia’s capital Kuala Lumpur, with the aim of expanding outreach to other markets in the region as well as Australia and New Zealand, Anwar said when announcing the deal, without providing further details.
Arm CEO Rene Haas said the agreement was poised for success, given Malaysia’s decades of experience in the semiconductor industry built around advanced packaging, assembly and manufacturing.
Economy Minister Rafizi Ramli said the government will pay Arm for its intellectual property, including seven of its high-end chip design blueprints.
The deal will also involve the training of 10,000 engineers in Malaysia, Rafizi told media ahead of the deal’s formal announcement.
Malaysia hopes the deal will allow domestic producers to scale up, creating 10 local chip companies with yearly revenue of $1.5 to $2 billion each.
“We are looking to build a complete supply chain in advanced industries such as AI data servers, autonomous vehicles, Internet of Things, robotics and others,” Rafizi said. “We will prioritise local players as the first resort for every part of the supply chain.”
The economy ministry and Arm will each have a set of selection criteria for the local companies, given the value of the intellectual property involved and to ensure successful production, Rafizi said.
The government will identify local companies with the capabilities and expertise to quickly begin manufacturing.
A host of technology giants, including Microsoft, Nvidia, Alphabet unit Google, and China’s ByteDance, have announced billions of dollars of digital investments in Malaysia since 2023, mostly in cloud services and data centres, powering an infrastructure boom driven by growing AI demand.
Last April, Malaysia said it planned to build Southeast Asia’s largest integrated-circuit design park and would offer incentives including tax breaks, subsidies and exemption from visa fees to attract global tech companies and investors.
Anwar said the park will house world-class anchor tenants and collaborate with global companies such as Arm.
(Reporting by Danial AzharEditing by John Mair and Frances Kerry)
