India Restricts Malaysia’s Microprocessor and Telecoms Imports

Hot on the heels of news of India’s restriction on imports of refined palm oil which broke on 8 January 2020,  a week later The Times of India of 15 January reported that India’s government is looking to restrict the import of microprocessors in retaliation for Malaysian Prime Minister, Tun Dr. Mahathir Mohamed’s continued criticism of India over Kashmir and the Citizen (Amendment) Act.

Unamed sources had told the major Indian newspaper that India’s government was working on imposing technical standards on microprocessors and also is putting in place a quality control order for telecommunications equipment and that India’s Customs authorities had been asked to comply with the quality control order as part of efforts to restrict the import of Malaysian-made equipment into India.

The Times of India regards this impending move as perhaps India’s first trade retaliation against Malaysia’s political stance on India, and perhaps the newspaper is right, since India earlier restriction on refined palm oil imports did not explicitly target Malaysia as such, though de-facto, it would adversely impact Malaysia from which India exports mostly refined palm oil and palm olein, whilst it would likely favour Indonesia from which India imports mostkly crude palm oil which is not restricted.

The question is whether this move will affect all microprocessor and telecommunications equipment manufacturers or assemblers in Malaysia or just the Malaysian ones.

According to The Edge, Malaysian semiconductor companies listed on Bursa Malaysia are involved in the mid to lower end of the value chain, serving foreign semiconductor manufacturers, brand owners, integrated circuit developers and fabricators. They can be divided into three groups – namely:-

Outsourced assembly and test (OSAT) companies such as Unisem, Globetronics, Inari Amertron and Malaysian Pacific Industries (MPI), which mainly provide outsourced services, including assembly, packaging, fabrication and testing.

The second are automated test equipment (ATE) manufacturers such as ViTrox, Elsoft, Aemulus, MMSV, VisDynamics and Pentamaster, which serve the OSAT companies and other multinational semiconductor manufacturers.

Third, are companies such as JF Technology and FoundPac, which design and manufacture high-performance test sockets and other materials for OSAT companies and semiconductor firms.

We did a quick check on the websites of the above Malaysian companies, especially the OSAT ones, and yes, they are as The Edge describes them, and where some of them make semiconductor products such as light-emitting diodes (LEDs), integrated circuit (IC) packages, including ICs for industrial, telecommunications, information technology, consumer and automotive applications.

On the other hand, of the over 37 members of the  Malaysian American Electronics Industry (MAEI), an electrical & electronics (E&E) industry committee of AMCHAM (Americal-Malaysian Chamber of Commerce) in Malaysia, prominent semiconductor and telecommunications equipment manufacturers or assemblers include:-

  • Agilent Technologies LDA Malaysia Sdn Bhd.
  • Analog Devices Sdn Bhd (Formerly known as Linear Semiconductor Sdn. Bhd.)
  • Flextronics Technology (Penang) Sdn. Bhd.
  • Freescale Semiconductor Malaysia Sdn. Bhd.
  • Integrated Device Technology (Malaysia) Sdn. Bhd.
  • Intel Technology Sdn. Bhd.
  • Jabil Circuit Sdn. Bhd.
  • Knowles Electronics (M) Sdn. Bhd.
  • Lumileds Malaysia Sdn Bhd
  • Micron Memory Malaysia Sdn. Bhd.
  • Microsemi Solutions Sdn Bhd
  • Motorola Solutions Malaysia Sdn Bhd (Innoplex)
  • NI Malaysia Sdn. Bhd.
  • ON Semiconductor Malaysia Sdn Bhd
  • Texas Instruments Malaysia Sdn. Bhd.
  • TF AMD Microelectronics (Penang) Sdn. Bhd

And some other…

Besides American E&E manufacturers and assemblers in Malaysia, there are European semiconductor companies such as NXP Semiconductors, as well as Japanese, South Korean and Taiwan semiconductor makers.

The U.S. based company Intel is noted for its microprocessors used in personal computers, many of which are made or assembled at Intel’s plants in Penang and more recently, Intel’s engineers worldide, including in Penang have collaborated on the design of its microprocessors.

So if India restricts the import of all microprocessors ate telecommunications chips made or assembled in Malaysia, what will be the reaction of respective foreign countries to such a measure.

We can only wait and see.