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in the first week of september, there was constant news in southeast asia. israel's tower invested $10 billion in india; india and singapore agreed to establish a comprehensive strategic partnership and signed a semiconductor cooperation agreement. as an important alternative to the west's de-sinicization, southeast asia has taken on a large number of industrial opportunities transferred from china in recent years, and southeast asian semiconductors have grown rapidly. as chinese semiconductor companies are going overseas, we now have to face several problems. will southeast asian semiconductors catch up? how to prevent asean from turning to india to compete with chinese semiconductors? how to use chinese capital, technology and talents flowing into southeast asia to shape a competitive landscape for southeast asian semiconductors that is beneficial to oneself?

india is coming on strong

india is the most active country in developing semiconductors in southeast asia. india has listed the semiconductor industry as the top priority of all industries. india has several major opportunities to develop semiconductors:

first, china has not yet established an advantage in the semiconductor industry, and india will not face the difficulty of overcoming china in other manufacturing fields for the time being. if chinese companies establish market advantages in semiconductors like mobile phones and electric vehicles, india will face many difficulties in developing semiconductors. now that china is subject to many sanctions, it is a difficult time for chinese semiconductors, which is also a rare development opportunity for indian semiconductors.

second, india is an english-speaking country with various systems in line with the west, making it an ideal new manufacturing base for the western camp. india, the united states and japan signed a cooperation agreement as early as 2023 to jointly build a semiconductor supply chain. international companies are also deeply embracing india. previously, foreign companies' r&d centers in china basically only served the chinese market, while international corporate r&d centers in india serve the world. for example, amd invested $400 million in india to establish its largest overseas design center, and samsung semiconductor india research center is samsung's largest r&d center outside of south korea; technology giants such as microsoft, google, and ibm have also established multiple r&d centers in india.

third, india’s demographic dividend and rapid economic growth. india’s population will catch up with china this year. it is also the world’s fifth largest economy and is expected to become the world’s third largest economy within three years. the output value of india’s domestic electronic products has exceeded the $100 billion mark. india’s goal is to achieve an electronic manufacturing industry valued at $300 billion by the 2026-27 fiscal year.

fourth, india's semiconductor design industry is very developed. india has 20% of the world's semiconductor design engineers. most semiconductor giants such as intel, amd and qualcomm have their largest overseas branches in india. india has developed higher education and has internationally renowned universities such as the indian institute of technology. currently, india has provided eda tools from international companies such as siemens and synaptics to more than 100 universities to cultivate semiconductor talents.

with these major opportunities, india is ambitious and determined to developsemiconductor manufacturing, and has introduced highly competitive industrial policies. the indian ministry of economics and trade has introduced a $10 billion support plan, and the subsequent $21 billion chip support plan is being discussed in the indian congress.

the indian ministry of economic affairs and trade's plan is very generous: for a wafer fab with an investment of $2.5 billion and a monthly production of 40,000 wafers, the federal government will reimburse 50% of the wafer fab cost, and the state government will reimburse 20% of the cost. the same applies to chip plants with an investment of $13 million that produce products such as sensors, and packaging and testing plants with an investment of $6.5 million. the indian government has also exempted basic tariffs on certain equipment, electrical equipment, machinery and other instruments and parts used in semiconductor manufacturing.

india has already landed semiconductor manufacturing projects such as the $11 billion project of tata group and powerchip, the $2.75 billion assembly plant of micron, and the $900 million packaging and testing plant led by renesas. now it has attracted israel's tower's $10 billion wafer plant. if the project is successfully implemented, it will be the first wafer plant in india with independent intellectual property rights of the world's top ten chip manufacturers.these chip manufacturing projects are particularly prominent in southeast asian countries, because most of the projects currently implemented in southeast asia are packaging and testing projects.the indian electronics and equipment manufacturers association (iesa) expects the indian semiconductor market to grow from $33 billion in 2023 to $85 billion to $100 billion by 2030. the indian government plans to become one of the top five semiconductor manufacturing economies in the world within five years.

asean has unlimited potential

opportunities in india are emerging in an all-round way, and the three semiconductor giants in asean, singapore, malaysia and vietnam, also have their own characteristics. in the new wave of changes in the semiconductor industry, asean has also ushered in an era of opportunities for the development of semiconductors.

singapore is the country with the highest level of semiconductors in southeast asia. it has a world-class business environment and world-class universities. it can not only produce excellent talents at home, but also attract talents from around the world. singapore has a complete design, manufacturing, and testing industry chain as well as the necessary infrastructure. singapore is also the only country in southeast asia with large-scale chip manufacturing capabilities.

although singapore is a city-state, it is willing to give up land to support semiconductor manufacturing. singapore has four wafer manufacturing parks, covering an area of ​​374 hectares, an area of ​​more than 500 football fields, equivalent to 0.5% of singapore's land area. semiconductor manufacturing is singapore's largest manufacturing project, and its output value accounts for nearly 20% of singapore's manufacturing output. singapore does not heavily subsidize the chip industry, but is willing to provide free land, water and electricity, tax breaks and other policies to attract first-class chip companies.

nine of the world's top 15 semiconductor companies have set up factories in singapore. globalfoundries has set up a factory in singapore since 2010. the singapore factory is its largest overseas base and the largest semiconductor manufacturing plant in singapore, which can produce about 1.5 million 300mm wafers per year. in the latest wave of semiconductor migration, singapore has also attracted umc, micron, st and others to set up new projects in singapore.

but singapore is a high-cost manufacturing base. according to the boston consulting group's global manufacturing cost competitiveness index, the total cost of goods exported from singapore to the united states is the highest in southeast asia, nearly 15% higher than its neighbor malaysia. so malaysia threatens singapore's semiconductor industry ambitions.

malaysia is a global semiconductor packaging and testing center, and almost all major international companies have packaging and testing bases in malaysia. this year, malaysia also began to focus on chip manufacturing. malaysia, with a population of only 33.94 million, claimed to invest 100 billion us dollars to develop semiconductor manufacturing, which immediately attracted manufacturing projects from international companies such as texas instruments and st. penang in malaysia has been selected as a semiconductor production base by intel, amd, broadcom, infineon and other companies. infineon's number of employees in malaysia has exceeded that of germany, and it plans to invest 7 billion euros to produce the next generation of power semiconductor silicon carbide.

at the same time, malaysia also has a good industrial ecology. technology giants such as microsoft, amazon, google, and ibm have set up cloud computing centers in malaysia, and terminal giants such as apple and dell have also set up production bases. malaysia has a soft environment similar to singapore, but the local salary is not enough to attract high-end talents. driven by the new industrial policy, its industrial ecology will be greatly improved.

vietnam has also been developing rapidly in recent years. samsung has invested $22.4 billion in vietnam to assemble mobile phones, and nvidia has invested $250 million to set up a research and development base. however, vietnam has little accumulation of semiconductors, and the semiconductor projects it has attracted, such as intel and other international companies, are mostly focused on assembly and packaging and testing. unlike the other countries, it focuses on attracting chip manufacturing projects.

based on the current status of semiconductors in asean and india, the following conclusions can be drawn.

first, india is the main competitor of china's semiconductor industry in the mature field in the future. among the latecomer countries in the semiconductor industry, india's land endowment, population size and industrial accumulation are most similar to those of china. since europe, the united states, japan and south korea are rushing to feed india, it has a much friendlier external environment than china did in the past. although india does not have a large-scale local terminal brand, with the large-scale transfer of international brands such as apple and dell to india, india has the opportunity to replicate china's development model from terminals to chip design to chip manufacturing. this is also the ideal semiconductor spoiler of the chip alliance-a latecomer economy that can compete with china in mature fields, but does not have many opportunities to climb to a higher level and cause trouble for developed economies.

second, india's development momentum is very strong, but it will not grow indefinitely. in april this year, the world bank warned that india is missing its demographic dividend. india's economic growth rate is seriously out of line with population growth, employment opportunities for men of working age are decreasing, and the female employment rate is less than 40%. during the demographic dividend period, china will add about 8 million non-agricultural jobs each year. the end of india's demographic dividend is between 2040 and 2050. whether india can succeed depends on whether it can replace china as the world's factory in the next fifteen to twenty years, but india is not currently competitive in any manufacturing field. india also has no semiconductor manufacturing base, and the current manufacturing projects are mostly concentrated in 40nm and above processes. although india's chip design is strong, it mainly serves international companies, and the number and quality of local companies are obviously insufficient.

third, asean is a partner of china's semiconductor industry. asean countries all have obvious shortcomings. singapore is limited in size, malaysian talents and markets are insufficient, vietnam's foundation is too weak, and its starting point is too low. they do not have the potential to compete with china as comprehensively as india. although china's semiconductor industry is far from the world's advanced level, china's funds, products, technology and talents have a great spillover effect when facing asean. more importantly, asean and china have a traditional friendly relationship. at least asean can remain neutral between the east and the west. polling agencies have conducted research in singapore, malaysia and other countries. when it comes to choosing sides in the confrontation between china and the united states, public opinion tends to favor china more. the governments of several major asean countries are striving to remain neutral between china and the united states. therefore, the cooperation between china's semiconductor industry and asean is greater than competition, and complementarity is greater than confrontation.

fourth, chinese terminal enterprises and semiconductor enterprises going overseas should be deeply embedded in the asean industrial chain to help asean grow rapidly. at present, the semiconductors of asean and india are basically at the same starting line. if asean semiconductors account for a larger share of the international market, it means that india's share is smaller. this time, modi's cooperation with singapore is just to cater to its needs and try to take over some low-value-added semiconductor businesses that singapore has transferred outward. india also tried to cooperate with singapore in semiconductor equipment and materials to establish a deep cooperative relationship with asean. at this point in time, this naturally implies the meaning of balancing china. china's semiconductor industry chain is in nanyang, and it has the ability to form a solid community of interests with asean countries, so as to effectively counter the interference of other countries outside the region. at the same time, china's mature technology should also actively explore the international market with the help of asean, and establish advantages in the global mature technology market as soon as possible on the premise of complementing the advantages of asean semiconductors.

conclusion

southeast asia is the key channel for china to connect with the world again. the semiconductor industry structure in southeast asia is taking shape, and china has the most ability and motivation to lead this process. china's semiconductor industry really started more than a decade ago. even though india now has deliberate support from the west, based on our development quality and speed, china's semiconductor industry has at least 10 years of competitive advantage. we have the ability to shape the industrial structure in southeast asia.

the next decade or so will be a critical period for china's semiconductor industry to break through the blockade, and for india to realize its demographic dividend. it can be said that the battle between the dragon and the elephant will depend on these critical decades. if china successfully completes the last piece of the semiconductor puzzle, china's position as the world's factory will be as stable as mount tai. during this period, a southeast asian semiconductor industry structure that is beneficial to china is crucial.