Malaysian glove, semicon players set to gain from US tariffs move

Malaysian glove, semicon players set to gain from US tariffs move

04 Feb 2025

Malaysian glove makers and semiconductor players are expected to benefit from the imposition of higher tariffs by the United States on imports of Chinese goods, said Kenanga Investment Bank Bhd.

In a research note yesterday, it said local glove makers would benefit from the broadened average selling price (ASP) discount on Chinese glove imports in 2025 following the US imposition of an additional 10% tariff to the current 50% on China glove exports into the US.

“For illustration purposes, a 50% plus 10% tariff hike is expected to raise Chinese glove producers’ ASP to US$27US$29 (RM121-RM130) per 1,000 pieces (from an assumed base case ASP at US$17-US$19 per 1,000 pieces),” it said.

Therefore, it said, this positions Malaysian glove makers’ ASPs of between US$18 and US$20 per 1,000 pieces at a steep 25%-32% discount versus the Chinese alternative. We keep our 2025 forecast ASPs at US$20-US$21 in our earnings model for now.

“Any volume loss in non-US markets can be offset by higher demand from the US, which historically commanded higher ASP than non-US markets, and the US had historically accounted for 35%-40% of Malaysia’s total glove volume,” it said.

The investment bank believes Hartalega Holdings Bhd is the biggest beneficiary because the US market typically accounts for 50% of its sales volume.

Regarding the semiconductor benefit from US tariffs, it said Malaysia, as a key player in outsourced semiconductor assembly and test and back-end semiconductor services, would stand to benefit from supply chain diversification as global technology firms may accelerate the adoption of a more aggressive China+1 strategy to reduce reliance on China.

“Over the medium term, Malaysian firms are well positioned to capitalise on the structural shift in global supply chains,” it said.

However, Kenanga Investment Bank said Malaysia may experience varying degrees of impact depending on supply chain realignments, trade policies and broader geopolitical dynamics.

Sourec: Bernama