Southeast Asian Nations Revise Semiconductor Strategies As Trump's Shadow Looms

Analysis Multiple Southeast Asian nations – including South Korea, Japan, and Vietnam – have recently opened up on efforts to rework or amend their semiconductor strategies.

This is in part to stay competitive in a shifting geopolitical landscape, with the recent US presidential election win by Donald Trump – along with a threat of more Beijing-targeted tariffs – raising uncertainty about business with China, the US's current largest trading partner. This is bound to have knock-on effects everywhere in the industry – China's neighbors included.

South Korea

South Korea's conservative ruling party, the People Power Party (PPP), is pushing for legislation that would give the semiconductor industry subsidies and an exemption from a national cap on working hours.

The nation introduced a labor policy in 2018 that capped maximum work hours to 52 – 40 hours of regular time and 12 hours of overtime.

PPP chief spokesperson Han Jia argued the restriction did not allow the industry to be competitive – even speculating it could cause the sector's workers to "leave the laboratory in the middle of development tests."

There are concerns in the region that incoming US tariffs on Chinese imports could lead Chinese chipmakers to reduce export prices, meaning the products of their Korean counterparts would be less competitively priced. More generally, global trade in the sector has been less than stable following Trump's election.

A party official tried to downplay these issues. "There are predictions that the semiconductor industry will be affected by the Trump administration, but I think companies will be able to respond wisely since they are making a lot of investments," PPP vice chairman Kim Sang-hoon reportedly said at a press conference.

"Giving subsidies upfront at the investment decision stage will serve as a strong incentive for companies, like in the United States," Kim also reportedly explained of the subsidies proposal, adding, "We will seek to establish a legal basis for similar support in Korea."

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Japan

Over in Japan, prime minister Shigeru Ishiba yesterday survived a runoff battle against the opposition to remain in the country's hotseat. Late on Monday, at a press conference following his reelection, Ishiba provided details on how his administration would provide more than ¥10 trillion ($6.5 billion) in support for his nation's AI and semiconductor industries by fiscal year 2030.

The prime minister noted he hoped the funds would provide a sense of predictability for private business operators.

He also outlined that funding "will be discussed between the various ministries and agencies from now on, but I would like to make one thing clear: we will not be issuing deficit bonds to fund this support."

Ishiba also promised his government would formulate a support framework to attract more than ¥50 trillion ($325 billion) in public and private investment over the next ten years and to "regional revitalization across the country," such as attracting Taiwan's TSMC to Kumamoto.

The Kumamoto facility, TSMC's second Japanese fab, is expected to be in operation by the end of 2027, providing a total production capacity of more than 100,000 12-inch (300mm) wafers per month.

Vietnam puts a ribbon on packaging

Vietnam's minister of planning and investment, Nguyen Chi Dung, told chip industry leaders last week that his government is "preparing a mindset ready to enter a new era" in reference to the four years between 2026 and 2030.

He reportedly told press that Vietnam's National Assembly was looking to simplify procedures for investing in chips manufacturing in the country as part of an effort to attract foreign companies.

That simplification effort would see the country "change its way of thinking from pre-screening to post-screening" for some high tech providers. Industrial parks and some environmental zones would no longer require prior approval for environmental protection and fire prevention.

According to a report [PDF] out earlier this year from BCG and the Semiconductor Industry Association, Vietnam is one of the countries expected to grow its assembly, test, and packaging (ATP) capacity.

While one of the goals of the US CHIPS Act is to grow the US's own domestic advanced packaging ecosystem – currently accounting for 4 percent of global ATP capacity and expected to grow to 7 percent by fiscal 2032 – the report forecasts "significant ATP capacity additions" in emerging markets, "primarily driven by Southeast Asia." Vietnam is currently listed as accounting for 1 percent ATP capacity in 2022/2023 but is expected to account for 9 percent of global ATP capacity by 2032, according to the report.

BCG describes Vietnam as a "relative newcomer" but notes its ability to attract investments from the likes of Intel and Amkor – which is reportedly investing $1.6 billion in a 200,000 square meter advanced packaging facility – and others. ®