KUALA LUMPUR, March 5 (Reuters) - Malaysia will pay Arm

Holdings $250 million over 10 years to acquire the

firm's chip design plans for local manufacturers, the government

said on Wednesday as it looks to produce its own chips within

the next decade amid an AI boom.

The Southeast Asian nation plans to produce its own graphics

processing unit chips in the next five to 10 years as demand for

artificial intelligence and data centres grows.

Economy Minister Rafizi Ramli said the government will pay

Arm for its intellectual property, including seven of its

high-end chip design blueprints.

The deal will also involve the training of 10,000 engineers

in Malaysia, Rafizi told media ahead of the deal's formal

announcement.

Malaysia hopes the deal with Arm will allow domestic

producers to scale up, creating 10 local chip companies with

yearly revenue of $1.5 to $2 billion each, Rafizi said.

The economy ministry and Arm will each have a set of

selection criteria for the local companies, given the value of

the intellectual property involved and to ensure successful

production, Rafizi added.

The government will identify local companies with the

capabilities and expertise to quickly begin manufacturing.

A host of technology giants, including Microsoft ( MSFT ),

Nvidia ( NVDA ), Alphabet unit Google, and China's

ByteDance, have announced billions of dollars of digital

investments in Malaysia since 2023, mostly in cloud services and

data centres, powering an infrastructure boom driven by growing

AI demand.

Last April, Malaysia said it planned to build Southeast

Asia's largest integrated-circuit design park and would offer

incentives including tax breaks, subsidies and exemption from

visa fees to attract global tech companies and investors.

Prime Minister Anwar Ibrahim said the park will house

world-class anchor tenants and collaborate with global companies

such as Arm.