Taiwan’s dominance in Asia’s semiconductor sector has dictated the world’s rising demand for the best quality and best-designed chips for several decades. Being an epicentre for global demand, almost 90% of advanced chips are supplied by key player Taiwan Semiconductor Manufacturing Company (TSMC). The rise of economic and geopolitical constraints on the border has increased the risk of misbalancing demand and supply in the long run. Semiconductors are integral to the developed economies in building satellites, cars, computers, smartphones, and other electronic devices. Looking at challenges like shortages, Asian regions plan to reduce dependency on Taiwan to avoid logistics hindrances and become more self-reliant to counter unforeseen circumstances.
According to a recent report by IDC, a market research firm, a significant shift in the global semiconductor landscape is on the horizon. Taiwan’s share is projected to decrease from 46% in 2023 to 43% in 2027. This shift is expected to be driven by companies outsourcing semiconductor assembly and testing (OSAT) to Southeast Asia, particularly Malaysia and Vietnam, which are predicted to increase their global share to 10% by 2027.
Prime Minister Narendra Modi, addressing the crowd at the ‘SemiconIndia 2023’ event, shared that “As India moves forward on the path of reform, new opportunities will be created. India is becoming an excellent conductor for semiconductor investments.”
Recently, Indo-Pacific regions like India, Australia, and Thailand have been hotspots for investors in semiconductor manufacturing, aiding them to position themselves in the semiconductor race. With the vision of making India the next chipmaker in the industry, the Indian government approved modified programmes that offer incentives to existing manufacturers. This initiative aims to expand the production of silicon compound semiconductors/silicon photonics/sensors, semiconductor packaging, semiconductor fabs, display fabs, and design. India also collaborates with Japan to strengthen active companies’ front-end processes and chip-making equipment to advance growth.
Thailand has also buckled up with driving companies upfront with front-end processes of designing semiconductors with technological advancement measures. The nation plans to shape the local industry for semiconductor manufacturing to be utilised for electric vehicles that will extend production capacity.
Continuing its self-reliant legacy, the USA took the lead with a strong player in semiconductors—Intel Corporation. In the coming years, Intel will be developed to give tough competition directly to companies like Samsung and TSM, along with top chip designers like Nvidia and Advanced Micro Devices. The current escalation between China and the USA greatly affects the pace of the semiconductor race. It compels ASEAN countries like Malaysia, the Philippines, Singapore, Thailand, and Vietnam to explore complex competition with localised manufacturing investment.
Evolving technologies like quantum computing and artificial intelligence are likely to revolutionise semiconductor manufacturing. The Asia Pacific holds the largest share in the global semiconductor market; according to SkyQuest, the global semiconductor market was valued at $429 billion in 2021 and is poised to grow to $908.92 billion by 2030, growing at a CAGR of 8.7% in the forecast period (2023-2030). Asian regions actively invest in thriving projects and programmes to avoid stagnant supplies due to raw material unavailability.
According to Deloitte’s latest insights, the emergence of artificial technology also has a wider impact on the semiconductor industry. One is fostering demand with new growth opportunities, and the other is utilising AI-based models to improve the design and manufacturing of semiconductor chips. Over the next 10 years, with artificial intelligence, global companies will increase their annual profit by $1 billion. An increase in the degree of intelligent autonomy will substantially increase the number of control chips and the storage capacity requirements. Automotive semiconductors have the highest CAGR rate, 14.3%, surpassing other considerable demand.
Asian nations have learned lessons for the future, and they are gearing up for the possibility of a global semiconductor shortage and a broken supply chain, which would directly impact production delays and inflated costs. Addressing challenges due to the China-Asia trade war ignites Southeast Asia’s role through the semiconductor supply chain. In such a scenario, ASEAN countries would need to double their production capacity to achieve the target of a high global share.
