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.

Arm Holdings Plc has agreed to provide chip designs and technology to Malaysia over the next decade, aimed at catapulting the Southeast Asian country beyond chip assembly and into more valuable semiconductor production.

Malaysia hopes its Arm deal will help foster 10 local chip companies with annual revenue between $1.5 billion to $2 billion each.