Malaysia is a key player in the increasingly vital chips sector, but it has been largely focused on packaging, assembly and testing services -- the lower end of the market.

The agreement will see Softbank-owned Arm provide chip designs and other technology, helping Malaysia to move into more value-added production such as wafer fabrication and integrated circuit design.

The Southeast Asian nation is paying $250 million over a decade to receive support from the British company, journalists were told at a ministry briefing.

"We have always wanted to move from the back-end -- which is on testing and assembly -- to the front-end," Malaysian Economy Minister Rafizi Ramli told Bloomberg Television.

The deal will put Malaysia "ahead of other countries", making it ARM's "main hub in ASEAN", a spokesman from the prime minister's office said, referring to the Southeast Asian bloc.

Tensions between Washington and Beijing over advanced tech, especially semiconductors, in recent years have forced many firms to look into relocating their manufacturing from China to other countries including Malaysia, Vietnam and India.

A prominent player in the industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech firm Bosch.

Malaysia's northern island of Penang, home to a number of facilities, is often dubbed the country's Silicon Valley.

And in April 2024, Prime Minister Anwar Ibrahim announced plans to build a massive semiconductor design park, an effort to move Malaysia beyond chips production.

llk-mba-skc/sco

SOFTBANK GROUP