Can Southeast Asia pitch itself as an ‘all-in-one’ chip hub?

Southeast Asia is riding an investment boom, as a surge in chip exports pushes economies like Vietnam and the Philippines up the World Bank’s income ladder, as defined by the World Bank.

Two forces are driving this surge: the AI wave and an intensifying rivalry between Washington and Beijing that has companies scrambling to diversify where they make things. Together, these trends are building a regional chip export industry worth roughly $258 billion.

But Southeast Asian governments aren’t satisfied with just housing a chip foundry or a packaging facility. The region wants to be a single, integrated supply chain right as the U.S.-China rivalry threatens to split the sector in two.

In 2025, the Association of Southeast Asian Nations (ASEAN) launched the ASEAN Framework for an Integrated Semiconductor Supply Chain (AFISS). The initiative—a signature deliverable of Malaysia’s 2025 chairship—hinges on each country playing a specialized, complementary role to move up the chip value chain. 

Now Southeast Asia can cement its role in the global supply chain for semiconductors, especially as AI demand makes the region’s position more valuable than ever. “Cultivation of semiconductor supply chains has put the region in the right place at the right time,” says Robert Walker, a research fellow at the Lowy Institute’s Indo-Pacific Development Centre. 

Malaysia, Singapore, Vietnam, Thailand and the Philippines have all benefited from the chip surge: Exports of semiconductors and semiconductor parts and components from Southeast Asia to China and the U.S. reached $42.2 billion and $15.1 billion respectively in 2023.

“Southeast Asia has emerged as a critical semiconductor manufacturing hub, particularly for assembly, testing and packaging. The region has attracted substantial investment since the pandemic as companies seek to diversify supply chains, manage exposure to U.S.-China tensions and build greater resilience,” Piriya Piriyakrit, senior analyst at BowerGroupAsia, says.

Walker thinks AI supply chains are “hitting their productive limits”—and that the capacity crunch that will follow gives Southeast Asia an opening. “As demand outpaces supply,........

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