Why ASEAN Could Be the Answer to the Global Chip Crisis — Part II
ASEAN does not need to replace Taiwan, South Korea, or other semiconductor powers—it needs to give the global industry more choices.
Part I of this series examined why the global semiconductor supply chain has become increasingly vulnerable and why ASEAN is well positioned to become a more important part of the solution. Part II will examine a potential plan to become an important part of this supply chain.
The region already has much of the necessary foundation, with each country bringing its own unique skill set to the table. ASEAN’s new Framework for Integrated Semiconductor Supply Chain (AFISS), now provides a regional mechanism for connecting these capabilities ASEAN Secretariat Annual Report 2025, 2026 ASEAN Framework for Integrated Semiconductor Supply Chain, 2025. The next challenge is implementation. If ASEAN can turn AFISS into deeper coordination, the region could become one of the world’s most important diversified semiconductor production bases. But this is more than just attracting factories or new companies. It will require ASEAN to build a genuinely regional semiconductor ecosystem.
Part I summary
Breaking Dependency Through Diversification
ASEAN’s focus should be on diversification, digitalisation and regional integration as central tools for reducing exposure to disruptions and external shocks Framework on ASEAN Supply Chain Efficiency and Resilience, 2024.
Creating Alternative Sourcing Options
A global company that relies on one production location faces a different level of risk from one that can distribute production across several countries. ASEAN can provide that diversification. The region already has semiconductor operations spread across multiple economies, with companies such as Infineon, Texas Instruments, GlobalFoundries, and others expanding their presence in Southeast Asia, showing that these companies value the diversification provided by ASEAN.
Enabling Supply-Chain Flexibility
Regional proximity is another advantage. ASEAN is close to some of the world’s fastest-growing consumer markets while also being deeply integrated into Asian manufacturing networks, making it possible to design supply chains around regional production rather than concentrating every stage in one location. A semiconductor component could be designed in one ASEAN economy, manufactured or processed in another, tested elsewhere, and incorporated into electronics or automotive products across the region.
ASEAN’s Investment Report 2025 highlights the complementary locational advantages of member states and the objective of integrating semiconductor supply chains across the region ASEAN Investment Report 2025, 2025.
Building Redundancy Into Global Supply Chains
ASEAN’s geographic diversity gives it an opportunity to build that redundancy across multiple countries. ASEAN’s supply-chain framework is intended to lower costs while improving the speed, reliability, and resilience of regional supply chains, particularly by promoting diversification and coordinated regional actionFramework on ASEAN Supply Chain Efficiency and Resilience, 2024.
The ASEAN Chips Act: What Should It Actually Do?
The phrase “ASEAN Chips Act” is useful as an ambition. AFISS should become the foundation for a practical regional semiconductor strategy rather than another layer of institutional coordination.
Unified Standards and Regulation
Differences in standards, customs procedures, investment rules and technical regulations can become hidden costs. The ASEAN Consultative Committee for Standards and Quality Sectoral Plan for 2026–2030 seeks to advance the harmonization of standards, technical regulations and conformity-assessment procedures, while strengthening the mutual recognition of conformity-assessment results ACCSQ Sectoral Plan 2026–2030, 2026 ASEAN Strengthens Regional Integration Through Finalisation of ACCSQ Sectoral Plan 2026–2030, 2025. The semiconductor sector should be one of the areas where those efforts are applied aggressively. A more predictable regional regulatory environment would make it easier to operate supply chains across multiple ASEAN economies.
Coordinated Investment
Instead of asking which country gets the next major factory, ASEAN should ask how they can coordinate their strengths to diversify the entire production chain to ensure they can complement each other with their own strengths while also covering each other's weak points, turning competition between ASEAN members into complementarity.
AFISS was developed precisely to support greater regional integration by identifying comparative advantages, strengthening industrial linkages, encouraging cooperation and making ASEAN more attractive as a diversified semiconductor production ecosystem ASEAN Framework for Integrated Semiconductor Supply Chain, 2025: Optimising Industry Linkages and Supply Chain Networks for Semiconductor Growth in ASEAN and East Asia, 2026. Building on this to develop a "Chips Act" to execute this framework would be ideal next step.
Challenges and Barriers to Implementation
The Capital Requirement Is Enormous
Semiconductor manufacturing is extraordinarily capital-intensive. Advanced fabrication facilities can require billions of dollars in investment before they produce commercial output.
Technology and Skills Gaps
Advanced semiconductor manufacturing requires highly specialized engineers, technicians and researchers. ASEAN therefore needs a regional talent strategy to identify them, so they can coordinate and optimize each member's strength
National Interests Could Complicate Coordination
Every ASEAN government naturally wants investment, jobs, and technology transfer for itself, which can create competition rather than cooperation. A regional semiconductor strategy will need to highlight how individual countries can benefit while making the entire regional ecosystem stronger. Again, the focus should be on complementarity, where each country brings its unique skills to the table. This is consistent with ASEAN’s wider strategic objective of combining national comparative advantages into more resilient, connected and competitive regional value chains ASEAN Economic Community Strategic Plan 2026–2030, 2025.
International Competition and Trade Dynamics
ASEAN’s semiconductor strategy will unfortunately have to operate in a highly competitive geopolitical environment. They will need relationships with all the semiconductor supply chains across Asia, Europe, and the United States. Fortunately, the region can position itself as a trusted, diversified manufacturing and technology platform. But ASEAN should not use misconstrue its semiconductor policy as an attempt to choose sides. ASEAN 2045 frameworks emphasise diversification, openness, stronger regional integration and greater resilience in an increasingly uncertain global economic environment Framework on ASEAN Supply Chain Efficiency and Resilience, 2024 ASEAN 2045: Our Shared Future, 2025, showing that diversified supply chains benefit everyone.
The Path Forward: Making ASEAN a Semiconductor Powerhouse
1. Turn AFISS Into an Implementation Strategy
AFISS provides the regional framework. The next step should be to move from framework to industrial execution with measurable execution. AFISS is designed to support deeper semiconductor supply-chain integration, resilience, industry linkages, talent development, and investment attraction; measurable indicators would make its implementation more transparent and accountable ASEAN Framework for Integrated Semiconductor Supply Chain, 2025.
2. Identify Regional Semiconductor Specializations
The goal is not for every country to do everything. It is for every country to contribute something valuable. ASEAN should avoid assuming that every member state needs a leading-edge. The smarter approach is specialization. Its semiconductor investment reporting describes differentiated national strategies and complementary advantages across the region, including Malaysia’s emphasis on advanced packaging and integrated-circuit design, Singapore’s focus on manufacturing and R&D, Vietnam’s semiconductor-development strategy and the Philippines’ semiconductor roadmap ASEAN Investment Report 2025, 2025. The strategy builds on the different capabilities that already exist across the region, with responsibilities across the manufacturing chain split up rather than pushing all member states towards identical industrial models ASEAN Investment Report 2025, 2025 ASEAN in the Global Semiconductor Race, 2024.
3. Attract Global Semiconductor Partners
ASEAN should actively market itself as a single regional semiconductor destination. The region has done the first step by attracting major global companies. The next step is to persuade those companies to build connected regional operations there. ASEAN’s Regional Investment Promotion Action Plan represents a move towards coordinated, value-chain-driven investment promotion rather than purely country-level competition. The plan aims to position ASEAN as a unified destination for investment in strategic sectors, including technology-intensive and sustainable industries ASEAN Regional Investment Promotion Action Plan 2025–2030, 2026 ASEAN’s Recent FDI, Competitiveness and Integration Development, 2025. This step will be crucial to ensure companies are convinced that a connected regional operation there would be worthwhile.
4. Build a Regional Talent Pipeline
ASEAN cannot become a semiconductor powerhouse without engineers. That means investment in:
Semiconductor engineering
Chip design
Materials science
Advanced packaging
Equipment maintenance
Industrial automation
AI and computational design
Research and development
Universities and technical institutions should work more closely with semiconductor companies, with skills programmes linked to actual industry requirements, while also making it easier for specialised workers to move across borders where appropriate.
This approach falls in line with the AFISS and ASEAN’s broader economic agenda identify human-capital development, technology upgrading, skills and innovation as necessary elements of stronger regional production networks and deeper global-value-chain participation ASEAN Economic Community Strategic Plan 2026–2030, 2025 ASEAN Framework for Integrated Semiconductor Supply Chain, 2025.
5. Make Energy and Infrastructure Part of Semiconductor Policy
Semiconductor manufacturing requires reliable electricity, high-quality water, sophisticated logistics and strong digital infrastructure. Therefore a regional Chip policy cannot be separated from energy policy. It should prioritize reliable and increasingly low-carbon electricity in major semiconductor clusters. Ports, airports, industrial parks and digital networks should also be integrated into regional planning. ASEAN’s connectivity strategy identifies efficient logistics, reliable infrastructure and resilient supply chains as necessary for stronger participation in global value chains ASEAN Connectivity Strategic Plan, 2025.
Long-Term Vision: ASEAN as a Top-Tier Semiconductor Region
ASEAN should set an ambitious long-term target. A top-three global semiconductor manufacturing region by 2035 would provide a useful strategic benchmark because it it would provide measurable goals for ASEAN to measure whether its regional capabilities are improving.
The region should not remain permanently concentrated in the lower-value segments of the semiconductor chain. They can aim for the whole chain. For example, Malaysia’s National Semiconductor Strategy aligns strongly with , ASEAN’s investment agenda and AFISS where they all point towards the same general direction: increasing technical capability, developing talent, improving industry linkages and moving into higher-value semiconductor activitiesNational Semiconductor Strategy to Guide Industry Up Value Chain, 2024 ASEAN Investment Report 2025, 2025. This shows ASEAN ambition and common goal in becoming a strong semi-conductor region that can provide the entire chain.
Creating an Innovation Ecosystem
ASEAN will need semiconductor startups, research centres, design houses, equipment suppliers, universities and venture capital. Fortunately, they are aware of this as ASEAN’s Investment Report 2025 shows that member states are already pursuing different strategies to capture more value. The report states that Malaysia’s push into integrated-circuit design and advanced packaging, Singapore’s emphasis on manufacturing, R&D and talent, the Philippines’ semiconductor roadmap and Vietnam’s longer-term semiconductor development strategy ASEAN Investment Report 2025, 2025, highlighting that the member states are already moving towards this direction. The challenge is connecting those national strategies.
Measuring Success
A regional semiconductor strategy should be judged by measurable outcomes. These could include:
Semiconductor FDI
Manufacturing capacity
Semiconductor exports
Advanced-packaging capacity
Number of regional suppliers
Semiconductor R&D spending
Number of trained engineers
Cross-border semiconductor projects
Technology-transfer agreements
Share of higher-value semiconductor activities
Number of companies operating across multiple ASEAN economies
These indicators can reveal whether ASEAN is actually becoming more integrated rather than simply attracting more factories.
Why ASEAN’s Moment Is Now
The global semiconductor crisis has demonstrated that efficiency without resilience can create enormous economic vulnerabilities. ASEAN does not need to replace Taiwan, South Korea, or the United States. It just needs to give global companies something the semiconductor industry increasingly needs: Options and diversification.
The region already has many of the building blocks. The next step is turning those individual strengths into a regional system. That is what an ASEAN Chips Act should ultimately mean. A semiconductor ecosystem, where each member contributes where it is most competitive, while the region reaps more of the value. If the region can connect its semiconductor capabilities as effectively as it connects its markets, ASEAN could become not merely a beneficiary of the next semiconductor cycle, but one of the forces shaping it ASEAN Economic Community Strategic Plan 2026–2030, 2025 ASEAN Framework for Integrated Semiconductor Supply Chain, 2025. As frequently stated in this series, the whole is greater than the sum of its parts.
Frequently Asked Questions
What would an ASEAN Chips Act actually do?
An ASEAN Chips Act would be a potential future policy framework for
implementing a more integrated regional semiconductor strategy. The existing ASEAN Framework for Integrated Semiconductor Supply Chain (AFISS) provides the documented regional foundation. A more ambitious approach could build on it through coordinated investment, common standards, skills development, supply-chain mapping and regional semiconductor targets.
How could ASEAN reduce global dependence on concentrated semiconductor production?
ASEAN could provide additional manufacturing locations across several member states. Rather than attempting to replace existing semiconductor powers, the region could distribute activities such as design, manufacturing, assembly, testing and advanced packaging across complementary ASEAN economies. This would give global companies more sourcing options.
Which ASEAN countries are most important to the semiconductor strategy?
Different ASEAN economies contribute different capabilities. Malaysia is particularly important in semiconductor assembly, testing and packaging; Singapore has advanced manufacturing and R&D capabilities; Viet Nam is developing semiconductor design and supporting industries; the Philippines has a significant electronics and semiconductor workforce; and Thailand has established electronics and automotive manufacturing ecosystems.
Why should ASEAN coordinate semiconductor investment?
Semiconductor supply chains cross national borders. Coordinating investment could help ASEAN avoid unnecessary duplication while encouraging member states to specialise in complementary parts of the value chain. A regional approach could make the combined ASEAN ecosystem more attractive to multinational semiconductor companies.
What skills does ASEAN need to develop its semiconductor industry?
ASEAN will need engineers, chip designers, researchers, technicians and specialists in areas such as semiconductor manufacturing, advanced packaging, materials science, industrial automation and equipment maintenance. Stronger university-industry partnerships and regional skills programmes will be important as the industry moves into higher-value activities.
How could the US-China rivalry affect ASEAN’s semiconductor strategy?
ASEAN is deeply connected to both the United States and China, so the region cannot simply remove itself from geopolitical competition. Its potential advantage is diversification: ASEAN can work with multiple major markets and technology partners while developing a more geographically distributed semiconductor ecosystem.
How should ASEAN measure the success of its semiconductor strategy?
Success could be measured through indicators such as semiconductor investment, production capacity, exports, advanced-packaging capabilities, R&D spending, skilled-worker numbers, cross-border supply-chain projects, technology-transfer agreements and the growth of higher-value semiconductor activities.
Could ASEAN become one of the world’s leading semiconductor regions?
ASEAN has the potential to become a major global semiconductor manufacturing and technology hub, but achieving that will depend on implementation. The region will need sustained investment, talent development, infrastructure, regulatory coordination and stronger integration between member states rather than simply attracting individual factories.
