Northern Vietnam is rapidly emerging as a critical hub for semiconductor production in Southeast Asia, with a strategic focus on developing a highly skilled workforce to support the growing industry. In response to the increasing demand for semiconductor manufacturing, the Vietnamese government is making significant investments in human resources. According to a 2023 report from Vietnam’s Ministry of Industry and Trade, the government is dedicating over $2 billion towards semiconductor training programs aimed at equipping the local workforce with the necessary skills to meet the sector’s future needs. These initiatives are designed to provide specialized education and hands-on training in semiconductor technology, which is expected to fuel the country’s ambition to become one of the region’s leading semiconductor exporters. As a result, Northern Vietnam is positioned to play a key role in the global semiconductor supply chain, capitalizing on its growing capabilities and competitive advantages.
The semiconductor industry plays a pivotal role in powering the electric vehicle (EV) sector, and Southeast Asia is increasingly becoming a hub for both. Indonesia and Thailand, two of the region’s largest economies, are strategically positioning themselves as key players in the EV market. As a result, the semiconductor industry in these countries is experiencing rapid growth. In this article, we explore the dynamics of the semiconductor industry in Southeast Asia, with a focus on Indonesia and Thailand’s burgeoning EV sectors, and the critical role semiconductors play in the future of mobility.
The Semiconductor Market in Southeast Asia
Southeast Asia has emerged as a critical player in the global semiconductor supply chain. According to a 2023 report from Statista, revenue in the Southeast Asian semiconductor market is projected to reach US$95.89bn in 2024, with integrated circuits dominating the market, accounting for US$86.45bn of the total revenue. The market is expected to grow at an annual rate of 11.25% (CAGR 2024-2029), reaching a market volume of US$163.40bn by 2029. Regionally, China remains the leading market, generating the highest revenue with US$177.80bn in 2024.
The rise of electric vehicles has been a significant driver of semiconductor demand. EVs require three to five times more semiconductor chips than traditional internal combustion engine vehicles, according to a 2022 report by McKinsey & Company. As Southeast Asia positions itself as a global hub for EV manufacturing, the demand for semiconductors is expected to escalate, making this sector vital for the region’s long-term economic development.
Indonesia’s Ambition to Become a Semiconductor Hub
Indonesia, the largest economy in Southeast Asia, is keen on becoming a dominant player in the global semiconductor industry. The country’s National Semiconductor Industry Development Plan, launched in 2023, outlines ambitious goals to increase its semiconductor production capacity, particularly focusing on the automotive and EV sectors.
As of 2024, Indonesia’s semiconductor market is valued at approximately $3.5 billion, with significant investments flowing into the sector from both domestic and international companies. Notably, Indonesia’s state-owned semiconductor giant, PT LEN Industri, is expanding its capabilities in semiconductor packaging and assembly, supporting the growing demand from the EV and consumer electronics markets.
Indonesia’s burgeoning EV market further contributes to this growth. In 2023, Indonesia’s electric vehicle sales saw a staggering increase of 200%, with 14,000 EV units sold in the first half of the year alone. The government has set an ambitious target to produce 2 million electric vehicles by 2025, which could potentially translate into billions of dollars in semiconductor demand. As a result, companies like Intel and Qualcomm are eyeing Indonesia as a strategic location for semiconductor manufacturing and R&D.
Thailand’s Role in the EV and Semiconductor Revolution
Thailand, with its established automotive industry, is another Southeast Asian country heavily investing in the EV sector. As of 2024, Thailand ranks as the largest automotive manufacturer in Southeast Asia, producing more than 2 million vehicles annually. A significant portion of this production is now shifting towards electric vehicles. In 2023, Thailand’s EV sales surged by 50%, signaling strong consumer demand and a favorable market environment for EV manufacturers.
Thailand is also rapidly enhancing its semiconductor capabilities. The country’s semiconductor industry was valued at $2.4 billion in 2022 and is projected to grow by 7.3% annually through 2030, according to a report from ASEANStats. Thai government policies, such as tax incentives for foreign investors and subsidies for local manufacturers, are helping to attract major players in the semiconductor industry, including Samsung, which has invested in semiconductor packaging facilities in Thailand.
The synergy between Thailand’s automotive sector and its semiconductor market is becoming increasingly evident. For example, the rise of EV production in Thailand directly boosts demand for semiconductor chips used in vehicle infotainment systems, powertrain management, and battery management systems. The Thai government has also launched initiatives aimed at promoting battery manufacturing, a critical area for semiconductor usage.
The Growing Synergy Between EV and Semiconductor Industries
The intersection of the EV and semiconductor industries in Southeast Asia is profound. EVs depend on a wide range of semiconductor components, from power management chips to microcontrollers and sensors. As both Indonesia and Thailand ramp up their EV production, the semiconductor demand will see a significant rise.
The following key semiconductor components are crucial for the EV market:
- Power semiconductors: These are critical for managing the flow of electricity in EVs and are used in the vehicle’s motor, battery management, and power distribution systems.
- Sensor chips: These are vital for EV safety features like automated driving, collision avoidance, and parking assistance.
- Microcontrollers: These chips are used in EVs for battery management, energy optimization, and communication between different vehicle systems.
With both Indonesia and Thailand pushing for large-scale EV production, they will need a steady supply of these critical semiconductor components. The increased demand for these components will likely attract global semiconductor manufacturers to set up or expand operations in the region. Companies like ASE Electronics (Taiwan), STMicroelectronics (Europe), and NXP Semiconductors (Netherlands) are already setting up plants in Southeast Asia to cater to the growing demand.
Strategic Investments in Human Resources for Semiconductor Growth
Future Outlook for Semiconductor and EV Markets in Southeast Asia
Looking ahead, Southeast Asia’s semiconductor market is set for explosive growth, driven largely by the expansion of the electric vehicle sector. Industry analysts predict that the semiconductor market in the region could exceed $100 billion by 2030, with EV-related semiconductor demand accounting for a significant share.
Both Indonesia and Thailand are expected to play central roles in this growth. As more investments flow into the EV and semiconductor industries, the region will likely see a shift towards greater technological innovation and manufacturing capabilities.
Final Thoughts
The semiconductor industry in Southeast Asia, particularly in Indonesia and Thailand, is primed for significant growth due to the accelerating demand from the electric vehicle sector. As both countries continue to ramp up their EV production and semiconductor manufacturing capabilities, they will become key players in the global supply chain. For investors and businesses looking to tap into this dynamic market, the semiconductor and EV sectors in Southeast Asia present compelling opportunities.
