Four Southeast Asian countries, including Thailand, Vietnam, Singapore, and Malaysia, are vying to become regional leaders in semiconductor manufacturing. The rapid growth of the global chip sector is driven by the increasing demand for artificial intelligence (AI) and electric vehicles, highlighting the importance of the sector in the international market.
Thailand
Thailand plans to accelerate investment in upstream sectors with a focus on semiconductors and batteries. The Board of Investment (BOI) will propose new measures to the government under Prime Minister Paetongtarn Shinawatra.
BOI secretary-general Narit Therdsteerasukdi has revealed plans to set up a "semiconductor council" to oversee investment in the sector and attract interest from companies in the US and Europe to invest in Thailand in the coming years.
Vietnam
With its large and relatively young population, Vietnam is emerging as a key player in the semiconductor supply chain in Southeast Asia. The Vietnamese government has prioritized the semiconductor sector in its economic planning and is capitalizing on foreign interest in alternative outsourcing locations.
As a strategic move, Vietnam is developing a Digital Technology Law (DTI) that offers various incentives to attract global chip companies. This legislation includes tax breaks of up to 150% for research and development expenses, free land use for up to 10 years, and expedited visas for foreign experts. In addition, companies investing more than $160 million will receive expedited registration and exemptions on certain raw materials and equipment.
The visit of U.S. President Joseph R. Biden in 2023 marked a significant turning point, followed by announcements by U.S. companies of local projects in Vietnam. Shortly after, Dutch Prime Minister Mark Rutte visited Vietnam, accompanied by major investment announcements from Dutch companies.
Nikkei Asia reports that US-based Nvidia is currently negotiating with FPT Corporation Vietnam to set up an artificial intelligence (AI) research and development facility. In addition, Dutch semiconductor company Besi has announced a USD 164 million investment in Vietnam.
Singapore
Since the 1960s and 1970s, Singapore and Malaysia have solidified their positions in the global semiconductor supply chain. Recently, Singapore further strengthened its position following a visit by Indian Prime Minister Narendra Modi.
During his meeting with Singapore Prime Minister Lawrence Wong, Modi signed four memorandums of understanding to deepen cooperation in semiconductors, digital technology, skills development and healthcare. Under these agreements, Singapore will support the growth of the semiconductor industry in India, while India will facilitate the entry of Singaporean companies and the development of supply chains in its large market.
Despite its small size and high operating costs, Singapore plays a critical role in the global semiconductor industry, contributing 11% of global chip production and about 20% of semiconductor equipment production.
The country aims to grow its manufacturing sector by 50% between 2021 and 2030 and become a hub for artificial intelligence (AI). Currently, semiconductors account for nearly half of Singapore's manufacturing output and 7% of its GDP.
As the pioneer of the ASEAN semiconductor industry, Singapore has a highly competitive R&D infrastructure and remains a key global player in advanced manufacturing.
Malaysia
Malaysia also has a strong focus on the improvement of its position in the global semiconductor supply chain. Prime Minister Anwar Ibrahim has emphasized the importance of transitioning to high-value chip manufacturing, calling it a "critical objective" and a new chapter in the country's history.
Through the New Industrial Master Plan 2030, the Malaysian government aims to excel in chip design for electric vehicles (EVs) and artificial intelligence (AI), and attract investment in advanced wafer manufacturing. The Minister of International Trade and Industry will lead strategic efforts to attract "strategic investments" in the semiconductor sector, which now accounts for nearly half of the country's manufacturing export earnings.
As part of this strategy, Malaysia is focusing on its significant role in the global chip supply chain, where it already contributes 13% of the assembly, test and packaging sector. The country is also strengthening its position in the end-user sector, particularly in automotive applications. Last year, Tesla established its regional headquarters in Malaysia, and Chinese EV manufacturers have also invested in the country.
