South-East Asia the guiding light

AS the curtains fell on SEMICON South-East Asia 2024, the energy and optimism that reverberated through the exhibition halls offered a compelling snapshot of our industry’s bright future.

With more than 18,000 participants from across the globe converging in Kuala Lumpur, the event not only underscored the dynamism of the semiconductor sector but also highlighted South-East Asia’s burgeoning influence in driving the global electronics landscape forward.

The global semiconductor industry is on a positive growth trajectory, with forecast revenue growth reaching US$584bil (RM2.74 trillion) this year. Projections remain bullish, with the industry projected to become a trillion-dollar industry by 2030.

This historic expansion will be fuelled by the fast-growing demand for a diverse range of disruptive technologies and emerging applications — from artificial intelligence (AI), autonomous and electric vehicles, and high-performance computing to 6G networks and autonomous machines.

South-East Asia is poised to be a key driver in achieving this ambitious US$1 trillion target. Each nation within the region — Singapore, Malaysia, Thailand, Vietnam and the Philippines — all play a critical role, bringing unique strengths and capabilities to the table.

Singapore has established itself as a hub for advanced semiconductor manufacturing and R&D, attracting significant investments from global giants. The country accounts for approximately 11% of the global semiconductor market share and about one-fifth of global semiconductor equipment manufacturing.

Malaysia continues to be a vital player, boasting a robust ecosystem, and is the world’s sixth-largest exporter of semiconductors. It accounts for 13% of the global market for packaging, assembly and testing.

The launching of the National Semiconductor Strategy (NSS) is a testament to the country’s commitment to furthering its semiconductor ambitions. The NSS, with its detailed targets and phased approach, showcases a serious, strategic commitment to bolstering the industry.

Gearing up for substantial growth with a projected valuation of US$20bil-US$30bil by 2030, Vietnam is positioning itself as a reliable partner and a crucial link in the global value chain with a focus on innovation and technology-driven growth.

Thailand, which recorded a total investment of 800 billion baht (RM102.83bil) in semiconductor production in 2023, offers a robust infrastructure and skilled workforce, giving the country a competitive advantage in the industry.

The semiconductor industry in the Philippines is expected to grow 10%-15% annually from 2024-2027, driven by increasing global demand for innovative technology in spaces such as manufacturing, research and development, design and testing.

The impressive turnout at SEMICON South-East Asia 2024 signifies the strong interest and commitment from industry stakeholders towards driving growth and innovation. The collaborative spirit and shared vision displayed are encouraging signs that the region is on the right trajectory.

Governments in South-East Asia are also increasingly recognising the strategic importance of the semiconductor industry and are stepping up their efforts to support its growth.

Initiatives like Malaysia’s NSS are a clear indication that countries are not merely content with playing a peripheral role but are aiming to be central to the industry’s global strategy. This governmental support is crucial for fostering an environment conducive to innovation and investment.

However, the road ahead is not without challenges. One of the most pressing issues we face globally and in South-East Asia is the talent gap. The industry remains in the grip of a global talent shortage, and we project that we will need one million additional workers by 2030.

Addressing this gap will require concerted efforts from both the industry and educational institutions to attract, train and retain talent.

Initiatives to promote STEM education, reskilling and upskilling of the workforce and creating more inclusive workplaces will be crucial.

Sustainability pressures also remain a key concern. Investors, customers, government agencies and other key stakeholders expect the semiconductor industry to make significant progress on sustainability goals.

Reducing greenhouse gas emissions, energy and water consumption, and the use of hazardous chemicals are imperative. Adopting sustainable practices not only aligns with global environmental goals but also enhances the industry’s long-term viability and competitiveness.

Clearly, these are issues that cannot be addressed by any single executive, company, or country. Industry collaboration within and across international borders is critical to overcoming these headwinds.

Despite these challenges, the outlook for the semiconductor industry remains overwhelmingly positive. The industry, which has always been a cornerstone of technological progress, will only gain in importance as the world becomes increasingly digital and interconnected.

Together, we can ensure that it continues to thrive and innovate, powering the next wave of technological advancements that will shape our future.

This article first appeared in Star Biz7 weekly edition.