RM4.7 trillion scandal in Malaysia involves Arm Holdings, the chip giant

Malaysia’s Anti-Corruption Commission (MACC) confirmed on Wednesday that it is investigating alleged abuse of power, fraud, and governance issues related to a deal worth 1.11 billion ringgit (about US$280 million, Rp4.72 trillion) between the Malaysian government and Arm Holdings, the UK chip giant. Malaysia, one of the world’s largest chip exporters, had previously signed the agreement in March to boost high-end semiconductor production amid global market volatility caused by the US-China technology war. MACC chief Azam Baki told AFP that 12 witnesses from various government bodies had been summoned so far, including from the Ministry of Economy, the Malaysian Investment Development Authority, and the Ministry of Trade, with a former minister among those called to testify. The former minister’s name was not disclosed. Rafizi Ramli served as Malaysia’s Minister of Economy at the time, while Tengku Zafrul Aziz held the portfolio of Minister of Investment, Trade and Industry. While Malaysia remains a key player in the semiconductor sector, the country has largely focused on packaging, assembly and testing at the lower end of the value chain. The Arm Holdings agreement, owned by SoftBank, was intended to give Malaysia access to chip design and other technologies to shift into higher-value production such as wafer fabrication and integrated circuit design. The government said at the time it would pay US$250 million over a decade for technical support from the British firm. Azam Baki said the investigation would be conducted fairly and professionally, with more witnesses to be summoned. Data from the Malaysia External Trade Development Corporation show that Malaysia’s semiconductor exports totaled 387.98 billion ringgit in 2024, about US$87.48 billion, placing the country among the world’s top 10 chip exporters. Northern Penang Island, home to several manufacturing facilities, is often dubbed Malaysia’s Silicon Valley. Prime Minister Anwar Ibrahim announced in April 2024 plans for a massive semiconductor design park as part of moving the country beyond basic chip production. Separately, Indonesia, through the Danantara Investment Management Agency (BPI Danantara), has signed a framework with Arm Limited to accelerate national semiconductor technology, especially chip design for data centres, automotive and AI.