US tariffs cast shadow over air cargo industry in Penang, Malaysia

Air Freight (Photo: Freepik)

Malaysian manufacturers are bracing for delayed orders and sluggish sales, which will drag down air cargo volumes in Penang ahead of the looming 25% US tariffs.

According to the Penang Freight Forwarders & Logistics Association, air cargo volumes handled at Penang International Airport, a key export hub for electrical and electronic (E&E) products, could fall by around 15% this year as shipments to the US are hit hard.

Finished and semi-finished semiconductors account for about 70% of the air cargo handled in Penang. “This is why when the industry is affected, the volume of cargo handled also drops correspondingly,” Ali Ahmad, honorary secretary-general of the association, told The Edge.

Earlier this month, a 25% import tariff was imposed on all Malaysian goods entering the US, effective from August 1. The government is currently in talks with the US to lower the tariff, although there are concerns about sector-specific tariffs on semiconductors, which could be applied separately from the country-level tariffs.

Last year, about 60% of Malaysia’s exports to the US were E&E products. Half of them were semiconductors while the other half were non-semiconductors, meaning only 30% of E&E exports to the US are likely to be duty-free.

Between January and April 2025, the association’s members handled 45,339 tonnes of air cargo, up 22% from the same period in 2024. Nearly two-thirds of the air cargo handled in the first four months of 2025 was exports, with the remainder being imports.

Penang International Airport is a key air cargo handling hub, handling about 70% of the country’s air cargo due to the presence of multinational corporations and semiconductor manufacturing companies in the state.

Among them, Penang is home to global chip giants such as Intel and AMD, as well as other leading semiconductor technology companies such as Broadcom and Infineon Technologies.

Resilience still possible

Datuk Seri Wong Siew Hai, president of the Malaysian Semiconductor Industry Association, said there were uncertainties and limited visibility for the second half of the year, as the business environment would depend on the US tariffs that would be announced soon.

Global semiconductor sales are likely to grow by 11.2% this year and as “as a key player in the global semiconductor supply chain, Malaysia stands to benefit significantly from this anticipated expansion,” Wong said, citing projections from the World Semiconductor Trade Statistics.

“Nevertheless, potential challenges remain, notably the uncertainties in global economic conditions,” he said. “While the sector's outlook remains positive, proactive policy responses will be crucial to sustain this growth momentum.”

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Source: Phaata.com (According to The Edge Malaysia)

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