This article first appeared in The Edge Malaysia Weekly on March 9, 2026 - March 15, 2026

PENANG-based chip design house SkyeChip Bhd and Chinese automaker XPeng are on the verge of obtaining access tokens to Arm Holdings plc’s Compute Subsystems (CSS), according to sources.

However, the formalisation of the approvals has remained in limbo in recent weeks, with no minister or government official willing to put their signature to the semiconductor deal yet, the sources tell The Edge.

This is because the billion-ringgit Arm deal has become entangled in the escalating clash between the Malaysian Anti-Corruption Commission (MACC) and former economy minister Datuk Seri Rafizi Ramli.

“SkyeChip and XPeng are very much approved in principle, but no one wants to put pen to paper,” says a source familiar with the matter, citing the sensitivity of the ongoing MACC probe.

Other players, including home-grown chip designers Oppstar Bhd (KL:OPPSTAR) and Infinecs Systems Sdn Bhd, as well as system-on-chip (SoC) specialist GreatAsic Technology Sdn Bhd and Chinese automobile firm Chery, have also applied for CSS tokens.

Sources say these firms have qualified, but their approvals might remain pending until the top two deals are finalised.

“The announcement of successful applicants was initially expected in late January or early February, but it was delayed probably because of the recent MACC-Rafizi saga,” says an executive at a local semiconductor firm.

When contacted by The Edge, Minister of Economy Akmal Nasrullah Mohd Nasir confirmed that the CSS token offer “remains valid”, with the government targeting signing this month.

“The ministry would like to clarify that the approval for the offer of token CSS remains valid, as it was duly approved by the Steering Committee of the Malaysia Government-ARM Limited Strategic Cooperation,” he says in a written reply.

The steering committee is co-chaired by Akmal and Minister of Investment, Trade and Industry Datuk Seri Johari Abdul Ghani. Also on the committee are representatives from the Ministry of Finance (MoF), the Ministry of Science, Technology and Innovation (Mosti), and the Malaysian Investment Development Authority (Mida) — an agency under the Ministry of Investment, Trade and Industry — among others.

“At present, Mida is liaising with the relevant companies and finalising the terms and conditions for the CSS token offer, with the objective of signing the agreement by March 2026,” Akmal says.

He adds that, as the secretariat to the various committee levels, including the strategic task force for the implementation of the cooperation, the Ministry of Economy “continues its work as usual” in screening applicants and supporting the committees in the approval process.

“This is to ensure that efforts to enhance the complexity and value chain of Malaysia’s semiconductor industry remain on track, in line with the 13th Malaysia Plan (13MP) and the National Semiconductor Strategy (NSS),” Akmal, who is Rafizi’s successor, explains.

He says the ministry “is fully cooperating with the MACC” in the latter’s investigation into the Malaysia Government-ARM Limited Strategic Cooperation in the semiconductor industry following allegations of corruption and abuse of power in the deal.

Akmal took over as economy minister in December last year, and inherited a portfolio closely linked to the US$250 million (RM1.1 billion) Arm deal.

Rafizi was widely regarded as the key figure behind the deal, but resigned as economy minister in May 2025, about two months after the initiative was announced, when he lost his party position. Since then, he has been a vocal critic of the government.

In May last year, Rafizi was unseated as deputy president of Parti Keadilan Rakyat (PKR) when he was defeated by Nurul Izzah Anwar, the daughter of Prime Minister Datuk Seri Anwar Ibrahim.

On March 5, 2025, the Malaysian government, through Mida, signed a landmark, decade-long deal with Arm — the UK-based chip architect controlled by Japan’s SoftBank Group Corp — to secure semiconductor licences and technical know-how.

The objective was to seed 10 local chip companies that are expected to collectively generate up to US$20 billion in annual revenue, and to produce Malaysian-designed chips in five to seven years, in line with the country’s ambition to move from a “Made in Malaysia” to “Made by Malaysia” model and to create global Malaysian champions.

Arm architecture represents one of the highest levels of semiconductor design and is essentially the “brains” behind artificial intelligence and high-performance computing.

Historically, only top-tier semiconductor powerhouses such as the US, China, Japan, South Korea and Taiwan have been deeply involved in Arm-based advanced design.

Anwar had described the Arm partnership as the “second semiconductor wave” and “one of the most ambitious technological plans Malaysia has ever seen”.

The initiative offers two access tiers: Arm Flexible Access (AFA), tailored for start-ups and smaller companies, and Arm CSS, intended for larger, more established enterprises.

A total of 25 access tokens has been allocated for AFA applicants, while seven are reserved for those applying through CSS.

The Edge is given to understand that there is strong interest in the CSS access tier, but little interest in the AFA segment.

In recent weeks, the public clash between MACC and Rafizi has intensified, with the Arm deal caught in the crossfire.

On Feb 10, Rafizi urged Anwar to suspend MACC chief commissioner Tan Sri Azam Baki pending an investigation into his assets.

He issued a statement following a Bloomberg report on Azam’s shareholding in Velocity Capital Partner Bhd (KL:VELOCITY) and was among several parties that questioned whether the size of the equity investment violated civil service regulations.

Rafizi called for Azam to be suspended from his duties for a comprehensive investigation to be undertaken over the alleged share ownership violation, an asset review and a probe into his involvement — if any — in transactions in two listed entities, MMAG Holdings Bhd (KL:MMAG) and NexG Bhd (KL:NEXG).

On Feb 13, Rafizi claimed that MACC was preparing to raid his home and that he was prepared for the “tactics of intimidation and fabrication of cases” used by previous administrations.

On Feb 16, MACC confirmed it had indeed opened an investigation paper into an agreement between the federal government and a foreign company, estimated to be worth RM1.1 billion, following a report filed by three Malay non-governmental organisations alleging misappropriation in the deal.

Rafizi has denied that the Arm deal was rushed and signed in haste, saying it went through various cabinet meetings and approvals.

In an exclusive statement to The Edge, he pointed out that the deal was brought to the cabinet three times, and involved meetings that were co-chaired and comprised the three ministries involved in the negotiations with Arm — the Ministry of Economy, Miti and MoF.

On Feb 21, Rafizi threatened legal action against the government if the allegations of corruption levelled against him do not end in charges.

“The aim is just to create a negative perception [against me]. I am going to sit down with my lawyers. If this doesn’t end with a charge in court against me, I want to sue the government for misusing and creating an issue just for character assassination,” said the Pandan member of Parliament.

Last week, MACC appeared to up the ante. It said it was investigating James Chai Jin Shern — a former aide of Rafizi’s — over his employment at a UK company linked to a government project.

The coming weeks will be crucial, as the fate of the CSS token allocations and the broader Arm collaboration appears to hinge on whether the government can move the agreements forward despite the political and investigative crosscurrents surrounding the deal. 

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