The intensifying global race for semiconductor dominance, driven by the ongoing tech rivalry between the United States and China, is reshaping global supply chains and economic dynamics. This race has significant implications for several ASEAN countries, strategically positioning themselves in the complex semiconductor competition.
Semiconductors are crucial components across various industries, from artificial intelligence (AI) applications to electric vehicles (EVs) and advanced technologies. In 2020, the United States held a dominant share of the global semiconductor market, followed by South Korea, Japan, the EU, and Taiwan.
The global semiconductor race escalated when the US announced export control policies targeting AI and semiconductor technologies destined for China. These measures aimed to limit China’s access and ability to produce advanced chips. Japan and the Netherlands followed suit, introducing export rules to control semiconductor technology exports to China, citing national security reasons. In response, China imposed restrictions on the exports of critical semiconductor raw materials, disrupting global supply chains.
Amid this semiconductor race, ASEAN is poised to play a pivotal role. The region offers strengths that can position it as a key player in the semiconductor industry, including growing manufacturing capabilities, skilled labor, and supportive government policies.
Singapore and Malaysia have significantly contributed to the global semiconductor supply chain. Singapore boasts substantial wafer fabrication capabilities, while Malaysia plays a pivotal role in assembly, testing, and packaging activities.
In 2021, ASEAN witnessed a significant increase in foreign direct investment (FDI), with electronics and semiconductor investments recording notable growth. Trade between ASEAN member states and the US surged, while trade with China reached remarkable levels. Semiconductor exports from ASEAN to both the US and China saw significant increases.
As ASEAN economies maintain deep connections with the US, Europe, China, and East Asia, the bloc must maintain a neutral stance in the escalating US-China rivalry. Prioritizing investments in research and development, streamlining regulations and standards, and investing in education and training programs will be crucial for ASEAN’s long-term development in the semiconductor industry.
Fueled by the US-China tech rivalry, the global semiconductor race has brought ASEAN to the forefront of this evolving landscape. With its inherent strengths and growing capabilities, the region has the potential to become a vital hub in the semiconductor industry. ASEAN must maintain a neutral stance, prioritize research and development, streamline regulations, and invest in workforce development to maximize its role. As the race for semiconductor supremacy continues, ASEAN’s strategic positioning becomes increasingly pivotal in shaping the industry’s future.
