Targeting Indonesia's Semiconductor Niche within ASEAN

Moving forward, Indonesia’s presence in the semiconductor industry does not necessarily need to be marked by the ability to produce all types of chips.

ASEAN is currently drafting a roadmap for the semiconductor ecosystem as competition for high-tech industry investment intensifies. This momentum of integration provides Indonesia with the opportunity to determine its position within the semiconductor industry chain, using investment as a means to build industrial capability rather than as an end goal.

Indonesia needs to select niches that can be strengthened to provide increasingly valuable industrial capabilities within the ASEAN semiconductor ecosystem. Not all production stages must be pursued; instead, the focus should be on areas closely aligned with existing capacities that possess room for growth.

Deputy Minister of Trade Dyah Roro Estroll Widya Putri stated that Indonesia is encouraging an ASEAN Semiconductor Roadmap through the strengthening of academic research, supply chains, critical mineral infrastructure, investment complementarity, and the harmonisation of incentives. This approach is necessary so that ASEAN nations can complement one another rather than competing for the same investments.

Competitive pressures are already evident. Thailand has proposed investments exceeding US$26.8 billion for semiconductor and advanced electronics projects throughout 2023 and into mid-2026. Of the 880 projects proposed, printed circuit board investment reached US$9.85 billion.

This figure is significant not because Indonesia must chase the same value, but because it demonstrates that companies have several location options for placing parts of their production chains within ASEAN. Factors such as cost, incentives, infrastructure, labour, suppliers, and proximity to end-user industries will ultimately determine these choices.

Choosing a niche…