Following the election of an anti-China candidate in the Taiwanese presidential election, the geopolitical risks associated with Taiwan, a central player in the global semiconductor supply chain, have elevated the roles of Southeast Asian countries like Malaysia, Singapore, and Vietnam as new global hubs for semiconductors.
According to semiconductor industry sources and foreign media on Jan. 28, the Singapore government recently proposed significant land, water, power, and talent benefits, along with exceptional tax and subsidy incentives, to attract a factory from TSMC and its subsidiary, Vanguard International Semiconductor Corporation. Nikkei Asia specifically reported citing industry insiders, “VIS is proceeding with the construction of its first 12-inch [300 mm] chip factory, investing US$2 billion for automotive semiconductor chip production.”
There were rumors in 2022 about TSMC and VIS establishing a new factory in Singapore. The Wall Street Journal (WSJ) quoted an industry source saying, “TSMC explored the possibility of establishing a semiconductor factory in Singapore for processes ranging from 7 to 28 nanometers used in cars and smartphones,” but this did not lead to an actual factory.
Global semiconductor companies are focusing on Singapore, which has well-developed infrastructure for research and development (R&D), design, materials and equipment, manufacturing, testing, and infrastructure. Global research institutions project that semiconductors, currently accounting for 7% of Singapore’s GDP, will continue to grow. GlobalFoundries, the world’s third-largest foundry, completed a new factory in Singapore in September last year with an investment of about 5 trillion won, and Taiwan’s UMC, ranking fourth, is also building a new factory there. Other major players like Micron, Europe’s largest system semiconductor company STM, chip design firm AMD, and testing company Advantest have established bases in Singapore.
The local industry believes that the election of the anti-China Democratic Progressive Party candidate Lai Ching-te and repeated failures in semiconductor factory plans due to conflicts with local governments have led TSMC to consider Singapore as a key overseas production base, beyond Japan, the U.S., and Germany.
Southeast Asian countries are also actively seeking to establish a “Post-China” status amid the U.S.-China semiconductor hegemony competition.
Penang, Malaysia, has been selected as a semiconductor production base by Intel, AMD, Broadcom, and Infineon. Infineon, a German company, employs more people in Malaysia than in Germany and plans to invest 7 billion euros in producing next-generation power semiconductors, Silicon Carbide.
Vietnam is also gaining attention as a semiconductor production base. Last December, Nvidia CEO Jensen Huang promised the Prime Minister of Vietnam, Pham Minh Chinh, to make Vietnam Nvidia’s second home. Vietnam, aiming for a “Post-China” position, has set a national goal to build its first semiconductor fabrication plant (fab) by 2030. Global semiconductor firms like Intel and Japan’s Renesas have already entered Vietnam but are limited to packaging, testing, and design.
A semiconductor industry insider noted, “Various tax benefits, low labor costs, and the established semiconductor ecosystems in Singapore and Malaysia are attractive. Unlike Korea, where the birth rate and the output of advanced degree holders in science and engineering are declining, Southeast Asian countries, including Vietnam, are currently producing a significant number of semiconductor professionals with master’s and doctoral degrees.”