In the wake of significant developments in the global semiconductor landscape, Southeast Asian countries such as Malaysia, Singapore, and Vietnam are increasingly positioning themselves as crucial players in the semiconductor supply chain. The recent presidential election in Taiwan, which saw the victory of an anti-China candidate, has heightened geopolitical uncertainties surrounding Taiwan, a pivotal hub in semiconductor production.
Sources within the semiconductor industry and foreign media reports have shed light on Singapore’s concerted efforts to attract semiconductor giants like TSMC (Taiwan Semiconductor Manufacturing Company) and its subsidiary, Vanguard International Semiconductor Corporation (VIS). The Singaporean government has proposed an enticing package of incentives, including land allocation, water and power resources, talent acquisition, as well as favorable tax and subsidy schemes. Nikkei Asia has reported that VIS is actively pursuing the construction of a state-of-the-art 12-inch chip factory with an investment of $2 billion, primarily focusing on automotive semiconductor chip production. There had been speculations in 2022 regarding TSMC and VIS establishing a new manufacturing facility in Singapore. The Wall Street Journal cited insider information, stating that TSMC had explored the possibility of setting up a semiconductor plant in Singapore, encompassing processes ranging from 7 to 28 nanometers, crucial for the automotive and smartphone industries. However, this exploration did not materialize into a concrete factory.
Singapore has garnered significant attention from global semiconductor companies due to its well-established infrastructure for research and development (R&D), design, material and equipment sourcing, manufacturing, and testing. Prominent research institutions anticipate continued growth in the semiconductor sector, which currently contributes 7% to Singapore’s GDP. GlobalFoundries, the world’s third-largest foundry, completed the construction of a new facility in Singapore in September of the previous year, with an investment of approximately 5 trillion won. Taiwan’s UMC, ranked fourth globally, is also in the process of establishing a new manufacturing site in the region. Notably, other major players like Micron, STM (Europe’s largest system semiconductor company), AMD (Advanced Micro Devices), and Advantest have already established their bases of operation in Singapore.
Local experts believe that the election of Lai Ching-te, a candidate from the anti-China Democratic Progressive Party, coupled with previous challenges faced by semiconductor companies in establishing factories due to conflicts with local governments, have contributed to TSMC’s consideration of Singapore as a key overseas production hub, in addition to its existing facilities in Japan, the United States, and Germany.
Furthermore, Southeast Asian nations are actively striving to solidify their “post-China” status, especially in light of the ongoing competition for semiconductor dominance between the United States and China. Penang, Malaysia, has been chosen as a semiconductor production hub by major players like Intel, AMD, Broadcom, and Infineon. Notably, Infineon, a German semiconductor giant, now employs more personnel in Malaysia than in Germany and plans to invest a substantial 7 billion euros in producing next-generation power semiconductors, including Silicon Carbide.
Vietnam is also emerging as a significant player in the semiconductor supply chain. In December of the previous year, Nvidia CEO Jensen Huang made a commitment to Vietnam’s Prime Minister, Pham Minh Chinh, to establish Vietnam as Nvidia’s second home. In pursuit of its “post-China” strategy, Vietnam has set an ambitious national goal to construct its first semiconductor fabrication plant (fab) by 2030. While global semiconductor firms like Intel and Japan’s Renesas have already ventured into Vietnam, their operations are currently limited to packaging, testing, and design.
An industry insider in the semiconductor sector has emphasized the attractiveness of Southeast Asian countries, particularly Singapore and Malaysia, due to various tax incentives, cost-effective labor pools, and well-established semiconductor ecosystems. This stands in contrast to some other regions, like Korea, which are facing declining birth rates and diminishing numbers of advanced-degree holders in science and engineering. In contrast, Southeast Asian nations, including Vietnam, are currently producing a substantial pool of semiconductor professionals equipped with master’s and doctoral degrees.
As the global semiconductor landscape continues to evolve, the rise of Southeast Asia as a vital semiconductor supply chain hub underscores the region’s growing significance in shaping the industry’s future.
