Three Questions to Angela Tritto : ASEAN’s Rise in Semiconductors

You highlight in your recent Hinrich Foundation report how ASEAN countries are seeking to capture a larger share of the global semiconductor value chain amid intensifying US-China competition. Could you walk us through the broader picture?

What is happening in ASEAN today is quite significant because the region is no longer simply a low-cost manufacturing base. Since around 2020, Southeast Asia has increasingly positioned itself as a critical pillar of global supply chain resilience, particularly as firms seek to diversify production amid geopolitical fragmentation, export controls, and "friend-shoring" strategies.

ASEAN’s contribution to global semiconductor export growth rose from roughly 20% in 2015 to nearly 30% in 2024, driven largely by analog semiconductors and optoelectronics, sensors, and discrete devices. ASEAN has also become a major destination for semiconductor-related investment, attracting more than USD 60 billion in FDI since 2020. This is a considerable expansion. 

That said, ASEAN is far from homogeneous. Different countries occupy distinct positions within the value chain and are pursuing different industrial strategies.

Singapore clearly stands out as the region’s technological leader. Its strategy is centered on innovation, advanced R&D, and high-value semiconductor activities rather than cost competitiveness. Through initiatives such as the RIE2025 plan, Singapore is investing heavily in IC design, advanced materials, gallium nitride (GaN), silicon carbide (SiC), and frontier semiconductor research. Institutions such as A*STAR and the Economic Development Board play a central role in developing innovation ecosystems and attracting sophisticated investment. Singapore is also increasingly becoming a source of outbound semiconductor investment into other markets, including India and Europe.

Malaysia occupies an important intermediate position. It already possesses one of the most mature semiconductor manufacturing ecosystems in ASEAN, particularly in assembly, testing, and packaging (ATP). Today, Malaysia accounts for around 13% of global ATP volume and remains one of the world’s largest semiconductor exporters. Compared with Singapore, Malaysia’s strategy remains more manufacturing-oriented. Through the National Semiconductor Strategy (NSS), the country is attempting to move further up the value chain into advanced packaging, IC design, semiconductor equipment, and power semiconductor manufacturing, including SiC-based technologies.

Could you help us better understand the policy instruments used by the governments of Singapore, Malaysia, and Vietnam, particularly in the areas of industrial policy, trade policy, and innovation policy?

The main shift is that semiconductor policy in ASEAN has moved from broad investment promotion to much more targeted, sector-specific industrial strategy. Governments increasingly see chips not only as an export industry, but as a source of economic resilience, technological upgrading, and geopolitical positioning.

In terms of industrial policy, approaches differ across countries. Singapore’s model is the most innovation-driven and occupies the highest-value segments of the ecosystem. Rather than relying on a standalone semiconductor plan, it embeds the sector within the RIE2025 framework and Manufacturing 2030 Vision, using A*STAR, EDB, SkillsFuture, and university-industry partnerships to strengthen IC design, compound semiconductors, advanced materials, and high-value R&D. Because operating costs are high, Singapore competes on ecosystem quality, research infrastructure, and trust rather than on labor costs.

Malaysia and Vietnam have also adopted structured long-term semiconductor strategies. Malaysia’s National Semiconductor Strategy aims to further strengthen its advanced packaging and testing, IC design, SiC-based technologies, talent development, and ecosystem building. Vietnam’s strategy, under Decision No. 1018/QD-TTg, similarly emphasizes advanced assembly and testing, specialized chips, design capabilities, and a large expansion of engineering talent. Both countries combine tax incentives, fiscal support, training programs, and technology-transfer partnerships to anchor foreign investment while building domestic capability.

Trade policy has also become increasingly important. ASEAN countries are actively using free trade agreements and strategic partnerships to deepen their integration into global semiconductor supply chains. At the same time, geopolitical tensions are forcing governments to adopt risk-management and compliance measures as well. Singapore and Malaysia, for example, have strengthened export monitoring mechanisms for advanced AI-related chips to comply with US export controls targeting China and Russia. Both countries have faced scrutiny over cases of circumvention of restrictions on sensitive technologies. Malaysia and Vietnam have also introduced export restrictions and domestic processing requirements related to rare earths and strategic materials. 

The broader diplomatic pattern in ASEAN is one of hedging rather than alignment. Countries continue to expand partnerships simultaneously with the United States, China, Japan, Taiwan, Europe, and increasingly India. This balancing strategy is a central feature of ASEAN semiconductor diplomacy today. Yet this balancing act is becoming harder to achieve as semiconductors, AI data centers, and critical minerals become more politically sensitive.

Innovation policy is where differences are most visible. Singapore clearly stands apart because it has developed a much deeper innovation ecosystem. Public R&D investment, university-industry collaboration, international talent attraction, and advanced research infrastructure all play a central role in its strategy. Malaysia is also attempting to strengthen innovation capabilities, but with a stronger focus on industrial upgrading and workforce development. Technical and vocational education and training (TVET) programs have become a major priority because policymakers view reskilling as essential for moving toward advanced packaging and design activities. Vietnam’s approach focuses more heavily on scaling human capital through partnerships between universities and industry, while relying significantly on foreign firms for technology transfer and ecosystem development.

Your analysis suggests that Singapore and Malaysia are moving into higher-value segments such as testing and advanced manufacturing, while Vietnam and Thailand are advancing in assembly and packaging. To what extent do you see an emerging "division of labor" within ASEAN in the semiconductor ecosystem?

Overall, ASEAN is increasingly developing both competition and complementarity within its semiconductor ecosystem. Singapore is concentrating on innovation-intensive activities; Malaysia on advanced packaging and industrial depth; Vietnam on scaling manufacturing and testing capabilities; and Thailand on printed circuit boards and EV-related electronics. Together, these different trajectories are shaping a differentiated semiconductor ecosystem at the regional level. We are beginning to see the emergence of a regional division of labor, although it remains incomplete and still largely market-driven.

One reason ASEAN has become attractive for semiconductor investment is precisely because different countries offer different comparative advantages across the value chain. Rather than every country attempting to replicate a fully integrated semiconductor ecosystem independently, what is gradually emerging is a more specialized regional structure where countries occupy complementary positions rather than competing directly across the entire value chain.

In some respects, this resembles earlier patterns of industrial specialization seen elsewhere in East Asia, although ASEAN’s semiconductor ecosystem remains less integrated than those centered around Taiwan, South Korea, or coastal China. It is also being shaped by market decisions and geopolitical pressure as much as by regional economic policies. Friend-shoring strategies, export controls, and supply chain diversification are encouraging firms to distribute operations across multiple countries according to cost structures, political risk, technological sensitivity, and talent availability.

However, important structural constraints remain. Infrastructure gaps, energy reliability, logistics costs, talent shortages, and dependence on external technologies continue to represent significant vulnerabilities across much of the region. Another major challenge will be whether countries beyond Singapore can gradually build stronger indigenous innovation ecosystems rather than remaining primarily manufacturing platforms dependent on foreign technology and investment.

This is why regional coordination matters. Initiatives such as the ASEAN Framework for Integrated Semiconductor Supply Chain (AFISS) can help harmonize standards and regulations, reduce duplicative incentive competition, and position ASEAN more as a coherent production base. The opportunity is not simply to attract more investment, but to turn market-driven complementarity into a more resilient regional semiconductor ecosystem. 

Copyright image : Aaron FAVILA / POOL / AFP
(L-R) Myanmar's Permanent Secretary of the Ministry of Foreign Affairs U Hau Khan Sum, Malaysia's Prime Minister Anwar Ibrahim, Thailand's Prime Minister Anutin Charnvirakul, East Timor's Prime Minister Xanana Gusmao, Vietnam's Prime Minister Le Minh Hung, Philippine President Ferdinand Marcos Jr., Singapore's Prime Minister Lawrence Wong, Brunei's Sultan Hassanal Bolkiah, Indonesia's President Prabowo Subianto, Cambodia's Prime Minister Hun Manet and Laos’ Prime Minister Sonexay Siphandone during the opening ceremony of the 48th Association of Southeast Asian Nations (ASEAN) summit in Cebu, central Philippines on May 8, 2026.