Malaysia will pay British chip designer Arm, a unit of Japan's SoftBank, $250 million over 10 years for the company's chip design solutions for local manufacturers, Economy Minister Rafizi Ramli said on Wednesday.

Malaysia plans to produce its own image processor (GPU) chips in the next five to 10 years as demand for artificial intelligence (AI) and data centers grows. The country aims to reach $270 billion in semiconductor exports by 2030.

Malaysia hopes that the deal with Arm will enable domestic producers to scale up, creating ten local chip companies with annual revenues totaling about $20 billion, which will help increase GDP by one percentage point.

Since 2023, a host of tech giants including Microsoft, Nvidia, Alphabet and ByteDance have announced billions of dollars of investment in digital technology in Malaysia, mainly for cloud services and data centers, where AI demand is driving an infrastructure boom.