$Arm Holdings (ARM.US)$, a subsidiary of $SoftBank Group (ADR) (SFTBY.US)$, has entered into a $250 million agreement with Malaysia to supply chip designs and technology for the next ten years.

What Happened: "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 government has decided to work with Arm "with the perspective of building the whole ecosystem."

Malaysian Prime Minister Anwar Ibrahim and Arm CEO Rene Haas signed a partnership agreement today.

The deal is a part of Malaysia's ambitious strategy to shift from chip assembly to more lucrative semiconductor production. Currently, Malaysia packages about 10% of the world's semiconductors. The country plans to use this deal to help local firms design their chips and aims to export semiconductors worth 1.2 trillion ringgit ($270 billion) by 2030.

Although Malaysia is already a key center for chip testing and packaging with facilities for $Intel (INTC.US)$, GlobalFoundries Inc., and $INFINEON TECHNOLOG (IFNNY.US)$, it has yet to make significant strides in chip design.

Prime Minister Ibrahim told a local news portal, Selangor Journal that this partnership is key to their "Made in Malaysia" initiative. "This marks a fundamental shift in our approach to semiconductors and technology that will define our future," affirmed Ibrahim.

The country aims to establish up to 10 chip companies with a combined annual revenue of $20 billion through this partnership. The agreement could potentially increase the country's GDP by one percentage point.

Why It Matters: This deal comes on the heels of Arm's confirmation of its central role in the $100 billion Stargate AI infrastructure project with OpenAI and $Oracle (ORCL.US)$ in February. The company's expanding role in AI infrastructure and strong momentum in data center deployments further underscore its value to Malaysia's semiconductor ambitions.

Malaysian PM Anwar Ibrahim also revealed that Arm will open its first Southeast Asian office in Kuala Lumpur, Malaysia, aiming to extend its reach into other regional markets, including Australia and New Zealand.

CEO Rene Haas stated that the agreement was well-positioned for success. He credited Arm's decision to collaborate with Malaysia to the country's decades of experience in the semiconductor industry.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.