US, Malaysia to sign deal on supply chain improvements

Kuala Lumpur

The United States and Malaysia plan to sign a cooperation agreement by early next year towards improving transparency, resilience and security in the semiconductor and manufacturing sector supply chains, the two countries announced on Thursday (Nov 18).

It comes as Malaysia seeks to tackle a shortage in semiconductor chips after supplies were disrupted due to curbs imposed to stem a surge in Covid-19 cases this year.

Malaysia's chip assembly industry, accounting for more than a tenth of a global trade worth over US$20 billion, has warned that shortages will last at least 2 years, even as some easing was expected towards the end of this year.

"Given Malaysia's critical role in global supply chains for semiconductors, electronics, health products, and other key goods, this announcement is an important first step in collaborating on current and long-term supply chain challenges for both our nations and the global economy," said a joint statement.

The announcement was made during a visit to Malaysia by US Secretary of Commerce Gina Raimondo, who together with Malaysian International Trade and Industry Minister Azmin Ali met with semiconductor industry representatives on Thursday.

At a later teleconference call with reporters, Raimondo said the US is confident about developing a framework with Indo-Pacific partners to strengthen businesses and the workforce.

She said that the framework was not envisioned as typical free-trade deal, and is something that must be inclusive and flexible to allow many countries to participate. REUTERS