Research Briefing | Jun 3, 2024

ASEAN: How to climb the semiconductor value chain

The rise of AI promises vast business opportunities and growth potential for the semiconductor industry. But these benefits are not evenly distributed along the value chain, so for ASEAN economies, where semiconductor activities are focused on lower value-added segments such as assembly-testing-packaging, the benefits are likely to be limited.

What you will learn:

  • As supply chains continue to diversify, many ASEAN countries have an opportunity to upgrade their roles in the global semiconductor value chain. Moving up the value chain means capturing a bigger piece of the sector pie, and also mitigates risks from exposure to sunset products and increased competition as foundries become more involved in advanced packaging.
  • To attract investment and move up the value chain, four country-specific factors are particularly important: human capital development, geopolitical positioning, ease of doing business, and intellectual property protections.
  • Developing a regulatory environment conducive to business and enhancing IP protection is crucial. In particular, the semiconductor industry relies heavily on IP, which is fundamental to innovation and to remaining competitive in the market. Countries with transparent legal systems and effective enforcement mechanisms are more attractive to semiconductor investors.
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