Recognising the need to diversify and move beyond low value-added and commodity-based growth, ASEAN has now started to increasingly turn its focus toward higher-value, high-technology industries. Semiconductor is one of them. With the market projected to reach
USD 1 trillion by 2030, the region has come to realise the strategic importance of semiconductors and felt the urgency to position itself more firmly within the global supply chains. The development of the ASEAN Framework for Integrated Semiconductor Supply Chain (AFISS) under Malaysia’s chairmanship last year –one of its Priority Economic Deliverables (PEDs)—is proof, demonstrating ASEAN’s concrete and actionable steps in this direction.
The framework essentially aims to strengthen regional supply chain connectivity and ultimately position ASEAN as a single production base for semiconductors. While non-binding, it represents an important step forward by providing a shared approach and goals that help guide regional priorities and objectives for all ASEAN member states. It seeks to harmonise regulatory policies, map each member state’s strengths and gaps, advance technology and innovation, and promote talent development and mobility across the region.
Where the region currently stands
Since 2020, the region has drawn more than USD 60 billion in semiconductor FDI, with most inflows largely concentrated in Malaysia and Singapore. Other countries, such as Vietnam, Thailand, Indonesia, and the Philippines, have also received a share of these investments, though on a much smaller scale. Between 2021 and 2024, the region attracted 12% of global greenfield investment in semiconductors, accounting for nearly half of total flows to the developing world. This marks a substantial increase from previous years, where ASEAN accounts for only 2% of the global greenfield flows during 2015-2018, back when the industry was yet to experience its recent surge. ASEAN has also accounted for 25% of global semiconductor exports in 2023. Thus far, however, ASEAN’s role is still largely concentrated in assembly, testing, and packaging (ATP) within the semiconductor supply chain, led primarily by Malaysia which accounts for 13% of the global ATP output alone. Meanwhile, advanced wafer fabrication in the region remains largely confined to Singapore.
Both Malaysia and Singapore are further ahead compared to their fellow ASEAN neighbours, as their policies and infrastructure are more mature and backed by well-established skilled talent pools. In contrast, others still face significant gaps that need to be addressed. While the region is regarded as the largest recipient and the second-largest source of regional semiconductor trade flows, the industry’s development varies widely across member states. Many continue to face significant challenges stemming from an unconducive investment climate, weakly integrated ecosystems, underdeveloped infrastructure, and a limited talent pool in the industry. Nonetheless, there are growing signs of momentum. Several member states have now begun shifting their attention toward developing their respective semiconductor industry. Vietnam, the Philippines, Indonesia, and Thailand, for instance, have introduced their own roadmaps or national strategies, focusing on developing and strengthening their respective semiconductor ecosystems. This, along with the momentum of the industry’s surge, also helps explain the emergence of the AFISS, which is intended to serve as a regional blueprint, encouraging more cooperation and partnerships with more advanced industry players to help address these gaps and accelerate the region’s semiconductor industry’s development.
Open pathways and strategic opportunities
The growing push among many ASEAN member states toward investing in the semiconductor industry has opened up new opportunities for actors beyond ASEAN to assume a more significant role in the region. This includes Taiwan, one of the leading players in the sector. While Taiwan’s presence in the region is not new, ASEAN’s recent shift and growing focus on the sector offer Taiwan more opportunities to further strengthen its engagement in Southeast Asia. This would also be in line with the New Southbound Policy, a foreign policy outlook that aims to deepen Taiwan’s strategic ties with the region. Yet, despite a decade of this strategic intent, Taiwan’s regional footprint remains limited thus far. Taiwan’s relations with countries in the region are generally centred on people-to-people connections and economic engagement, particularly in the agricultural sector, with limited spillover into broader strategic influence and presence. The region’s expanding semiconductor agenda, therefore, offers a timely opportunity for Taipei to gain a stronger foothold in ASEAN.
A key entry point for Taiwan’s engagement with countries in this region can lie in three areas: building collaborative actions in sharing know-how on building a robust semiconductor ecosystem, facilitating technology transfer, and supporting the development of high-skilled talent across the industry. These three areas are among the priorities outlined in the AFISS framework. Taiwan’s experience in developing a strong semiconductor ecosystem, including the establishment of science parks, offers concrete models that ASEAN countries can draw on. They can offer lessons learned and best practices, allowing countries in the region to adjust to their own national contexts. Taiwan’s experience also extends beyond the development of key physical infrastructure to also include the development of research centres, supporting institutions, the cultivation of talent and manpower, as well as the business-friendly environment and financing mechanisms suited to a highly capital-intensive industry. Insights into Taiwan’s model and its success story could offer countries new perspectives to ensure that they can also develop a sustainable and resilient semiconductor ecosystem.
Additionally, technology transfers and talent development can also serve as other entry points for a highly experienced Taiwan to establish stronger connections with ASEAN countries. Taiwan has now established itself as the leader in advanced semiconductors. In contrast, most of the ASEAN countries are only beginning to develop their semiconductor sectors. This creates space for Taiwan to offer support through technology and knowledge transfer in less advanced segments of the value chain, without undermining its own competitive advantages. Moreover, capacity building initiatives and support for developing skilled talent pools will also be particularly important and could have a meaningful impact in countries across the region, where skilled talent pools for the semiconductor industry are still relatively limited.
AFISS is only a starting point for ASEAN, as it still looks forward to a more actionable Plan of Action to further strengthen its direction going forward. However, it already signals a shift: the region is moving beyond manufacturing and adopting a strategic approach that takes into account the entire ecosystem, including human capital, with the goal of establishing the region as a resilient and sustainable semiconductor supply chain hub. This could become a key entry point for Taiwan, whose engagement in the region has been inconsistent in the past few years. With ASEAN now focusing more on the semiconductor industry, Taiwan has a clear opportunity to step in, strengthen ties, and build meaningful partnerships with countries in the region. Success, however, will depend on Taiwan’s ability to engage consistently and leverage its sectoral expertise, carrying out its New Southbound Policy and strengthening its presence in the region.
