Overview

Semiconductors have become one of the most critical drivers of the global economy, powering digital transformation across industries from consumer electronics and automotive to artificial intelligence and advanced defence systems. Global demand is growing rapidly, with the market projected to expand from USD 600 billion in 2024 to nearly USD 980 billion by 2029. As chips surpass oil in strategic importance and trade volume, the industry has become not only an economic cornerstone but also a matter of national security and global resilience.

ASEAN stands at a pivotal moment in this evolving landscape. The region has long been a reliable player in assembly, testing, and packaging, yet greater value lies in moving upstream into design, wafer fabrication, and innovation. The ASEAN Framework for Integrated Semiconductor Supply Chain (AFISS), while still under development, provides a roadmap for this transition. By enhancing infrastructure, deepening cooperation, and investing in talent, ASEAN can reposition itself from a supporting role to a central, trusted hub in the global semiconductor ecosystem.

Context and Vision

The semiconductor industry is traditionally structured around three main stages: design, wafer fabrication, assembly, testing, and packaging. ASEAN economies have excelled in the latter, building global reputations as reliable partners for outsourced assembly and testing. Malaysia, the Philippines, Vietnam, and Thailand all host significant facilities that employ hundreds of thousands of workers and serve leading multinational corporations. Yet this success also highlights the region’s limitations: ASEAN remains heavily concentrated in labor-intensive, lower-value activities.

The AFISS was proposed to address this imbalance (ASEAN, 2025). At its core, AFISS is built on non-binding principles, designed to accommodate the diverse levels of readiness among ASEAN Member States (AMS). This flexibility ensures inclusivity: advanced economies like Singapore can push the frontier of semiconductor R&D and logistics, while emerging economies can focus on incremental capacity-building. By doing so, AFISS recognizes diversity as a strength rather than a weakness.

The vision articulated by AFISS is of an agile, resilient, and future-ready regional ecosystem. In this vision, each AMS contributes according to its comparative advantage. Malaysia continues to lead in advanced packaging, Vietnam strengthens its assembly hubs, the Philippines builds IC design capacity through its Center for Integrated Circuits and Devices Research, and Singapore leads logistics and research excellence. When integrated, these efforts form a comprehensive ecosystem far more valuable than any country could achieve on its own.

Equally important, AFISS represents ASEAN’s geopolitical positioning. In an era when supply chains are increasingly weaponized, ASEAN’s neutrality, cohesion, and central location grant it a unique opportunity to serve as a secure and trusted hub. The framework’s objectives, enhancing integration, building resilience, promoting technology transfer, supporting SMEs and talent, and forging global partnerships are all grounded. These objectives are organized around three focus areas: supply chain integration, technology and infrastructure development, and talent cultivation.

Strategic Directions

To translate vision into action, AFISS is structured around six strategic thrusts. The first emphasizes infrastructure. Semiconductor production requires specialized facilities, from cleanrooms and wafer fabs to advanced logistics hubs. Without this infrastructure, ASEAN cannot realistically aspire to move upstream. Countries such as Malaysia, with its Kulim High-Tech Park, and Thailand, through the Eastern Economic Corridor, demonstrate how infrastructure can attract global players and anchor investment.

The second thrust is technology innovation, transfer, and sharing. ASEAN must close its R&D gap by deepening collaboration with global partners like Japan, Korea, and the United States. Adoption of open-source RISC-V architecture and the establishment of ASEAN technology transfer offices are steps toward enabling design capacity. The Philippines’ Center for Integrated Circuits and Devices Research serves as a pilot model for building a bridge between universities and industry to accelerate IC design expertise.

The third and fourth thrusts, developing supply chain hubs and reforming industrial and trade policies, speak to integration and policy coherence. Streamlined customs processes, harmonized fiscal regimes, and targeted incentives are needed to reduce duplication and attract investors. AFISS also envisions creating an ASEAN Semiconductor Industry Association to coordinate policy dialogue and industry advocacy. These moves help present ASEAN not as fragmented markets but as a single, coherent production base.

The final two thrusts focus on market access and talent. Joint ventures and ASEAN-branded products can enhance visibility on the global stage, while programs like Malaysia’s Engineering Talent for Semiconductor Industry (ETSI) Programme and regional talent mobility frameworks ensure that the human capital challenge is addressed. Singapore’s emphasis on smart manufacturing and Vietnam’s expanding electronics base further show how member states can complement one another. Collectively, the six thrusts offer a comprehensive playbook to strengthen ASEAN’s semiconductor future.

Insights from Leaders and Experts

Policy voices from within the region reinforce AFISS’s core philosophy: cooperation is more valuable than competition. Liew (2025) underscores that ASEAN Member States must not see each other as rivals but as contributors to a common ecosystem. This complementarity maximizes regional value creation and prevents resource fragmentation.

Experts caution that infrastructure gaps remain a critical risk. Han and Ramli (2025) argue that without major investments in wafer fabrication and advanced packaging, ASEAN risks being locked into low-value positions. Their warning highlights the need for public-private partnerships, foreign direct investment, and alignment with national budgets. Infrastructure is not merely a supporting factor; it is the backbone of ASEAN’s ability to move upstream.

Sustainability has emerged as another central theme. Semiconductor production is resource-intensive, consuming significant amounts of energy and water. Embedding ESG principles into AFISS is therefore both a moral responsibility and a competitive necessity. Policies promoting clean energy use, water recycling, and carbon-neutral chip packaging would give ASEAN an advantage in attracting responsible global investors.

Finally, external engagement will define ASEAN’s role in the global supply chain. Integrating with initiatives such as the U.S. CHIPS Act, Japan’s material supply chains, and South Korea’s fabrication networks provides both technology transfer and resilience through diversification. By combining internal complementarity with external engagement, ASEAN can establish itself as a neutral and indispensable link in global semiconductor networks.

Opportunity Assessment and the Way Forward

Quantitative analysis lends weight to AFISS’s qualitative vision. Wang et al. (2024) applied a multi-criteria decision-making model to assess ASEAN’s semiconductor readiness. The study evaluated fifteen indicators, from GDP and R&D spending to patent applications, logistics, and human capital (Appendix 1). The most influential factors were patent activity, resilience to natural disasters, and the number of science and engineering graduates, showing that intellectual property generation, physical security, and education are decisive for competitiveness.

Results highlight Singapore’s clear lead, with world-class infrastructure and R&D capacity. Malaysia demonstrates strong potential through its ETSI programme and advanced packaging strength. Vietnam and the Philippines are rising players, with Vietnam leveraging its electronics base and the Philippines focusing on IC design and talent development. Other ASEAN states, while less competitive individually, can still contribute to the ecosystem through resources, labor, or niche specializations (Appendix 2).

The model also provides a method for prioritization. By measuring how close each country is to the “ideal” ecosystem through Euclidean distance, policymakers can identify gaps and allocate resources effectively. This ensures that AFISS implementation is guided not just by political ambition but also by empirical evidence.

The way forward is clear. ASEAN must invest in upstream activities, align fiscal and trade policies, and integrate national programmes with AFISS priorities. Businesses should see ASEAN as a diversified but interconnected hub, offering opportunities across multiple value chain segments. By combining visionary leadership, strategic investment, and data-driven policymaking, ASEAN can transform itself into a competitive and resilient semiconductor hub.

Conclusion

ASEAN has long been vital in back-end assembly and packaging, but its future competitiveness depends on moving upstream into design, fabrication, and advanced R&D. This transition cannot be achieved through fragmented national strategies; it requires a collective regional effort.

For policymakers, the lesson is clear: localized initiatives such as Malaysia’s Engineering Talent for Semiconductor Industry Programme or the Philippines’ IC design centers gain real strength only when aligned across ASEAN. Harmonized policies, shared infrastructure, and sustainability commitments will be key to scaling impact.

For businesses, ASEAN presents both opportunity and urgency. The region offers diverse entry points from packaging and logistics to design and smart manufacturing, but investors will only commit if ASEAN demonstrates regulatory coherence and long-term resilience. In essence, the semiconductor agenda is not just about technology but about transformation. By cooperating rather than competing, ASEAN can evolve into a trusted, sustainable, and globally significant hub by 2045.

References 

ASEAN. (2025). ASEAN Framework for Integrated Semiconductor Supply Chain (AFISS). For adoption.

Han, P., & Ramli, I. M. (2025, July 15). Building resilience in ASEAN’s semiconductor supply chain. The Jakarta Post. https://www.thejakartapost.com/opinion/2025/07/15/building-resilience-in-aseans-semiconductor-supply-chain.html

Liew, C. T. [@chintong.liew]. (2025, September 24). ASEAN Framework on Integrated Semiconductor Supply Chain (AFISS) [Instagram post]. Instagram. https://www.instagram.com/p/DO-o30zDl9z/

Wang, C. N., Nhieu, N. L., Chiang, C. T., & Wang, Y. H. (2024). Assessing Southeast Asia countries’ potential in the semiconductor supply chain: an objectively weighting multi-criteria decision-making approach. Humanities and Social Sciences Communications, 11(1), 1-17.

Appendix

Appendix 1. Indicator Weights of Semiconductor Readiness

Source: Wang et al., 2024.

Appendix 2. Vector Normalized Decision Matrix for ASEAN Semiconductor Readiness

 Source: Wang et al., 2024.