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Malaysia’s chip industry falls in crosshairs of US sanctions on Russia

Kuala Lumpur-based Jatronics has been accused of supplying parts needed to sustain Moscow’s war in Ukraine.

Malaysia’s chip industry falls in crosshairs of US sanctions on Russia | Technology News | Al Jazeera
"In April 2022, only weeks after Russia’s full-scale invasion, Malaysia’s ambassador to Russia attracted controversy when he told Russian media that the country would consider “any request” for semiconductors. In a keynote address at the SEMICON Southeast Asia 2024 tech conference last week, Malaysian Prime Minister Anwar Ibrahim pitched his country as the ideal “neutral and non-aligned” host for semiconductor makers amid the US-China tech war and said his government would aim to attract $100bn in new investment. While the policy may serve Anwar’s government economically and politically, by luring foreign investors and pushing back on Western pressure to pick a side, it also makes domestic companies doing business abroad vulnerable to the sort of sanctions just slapped on Jatronics, said Zachary Abuza, a professor at the National War College in Washington.“They are setting them up to be sanctioned. Malaysia is clearly under watch from the United States right now,” Abuza told Al Jazeera.In December, the US sanctioned four companies based in Malaysia for allegedly helping to funnel drone parts to Iran, which Washington accuses of selling drones to Russia for use in Ukraine. Earlier this month, a senior US Treasury Department official visited Malaysia to press upon the government the sanctions risk it was running by allegedly allowing Iranian oil and funds for “terrorist groups” to flow through the country.

The Straight times "

Additionally, Neoh said this is not the first instance of US sanctions on Malaysian firms.

He noted that in December 2023, four firms were sanctioned for their involvement in Iran's drone programme.

"In our view, the sanctions on Jatronics highlight that Malaysian firms remain on the US sanctions radar.

"While Malaysia's neutral political stance and strong ties with various trading partners provide local firms with opportunities to circumvent trade barriers, the associated risks can be significant.

"There is a possibility of further sanctions or even import tariffs being imposed on Malaysian firms if such activities continue unchecked by Malaysian authorities. These measures could materially impact Malaysia's economy, particularly in terms of exports to the US," he said. 'Limited impact from Jatronics sanctions' | New Straits Times | Malaysia General Business Sports and Lifestyle News (nst.com.my)

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