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Southeast Asian nations are rushing to reshape their semiconductor sectors following the recent U.S. presidential election, which has renewed concerns about potential tariffs on Chinese goods and broader trade instability. South Korea, Japan, and Vietnam are all adjusting their strategies to maintain a competitive edge in this changing geopolitical landscape.
South Korea: Subsidies and Removing The Workhours Cap
South Korean President Yoon Suk Yeol has warned of the risks brought by Trump’s tariffs. These could make Chinese producers cut down prices, making Korean chips less competitive internationally.
South Korea’s ruling party, the People Power Party (PPP), has introduced legislation to fend off potential economic shocks. The bill proposes to provide subsidies to chipmakers and increase their working hours cap to 52 hours per week. South Korean officials hope these measures will help companies like Samsung and SK Hynix stay competitive in the face of new U.S. policies. Its significance lies in whether the U.S. imposes steep tariffs on Chinese imports.
“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,” said PPP Vice Chairman Kim Sang-hoon.
Japan: Investment Boost
Japan, meanwhile, will increase its financial support for its semiconductor industry. Prime Minister Shigeru Ishiba has plans to allocate over ¥10 trillion (approximately $6.5 billion) for semiconductor and AI projects by 2030.
Ishiba trusts that these funds would provide stability for the private sector. He hopes the funds will provide a sense of predictability for private business operators. It will be discussed between the various ministries and agencies. Ishiba clarified that they “will not be issuing deficit bonds to fund this support.”
Japan also aims to attract large public and private investment to support regional semiconductor projects. One project in view is the new TSMC facility in Kumamoto, expected to open by 2027.
Vietnam: Simplifying Regulations to Attract Investment
Vietnam is a newer player in the semiconductor field. A report by the BCG and the Semiconductor Industry Association sees Vietnam rising in the assembly, test, and packaging (ATP) game.
To attract foreign investments, the country aims to make investment regulations more lenient. This means that industrial parks and certain environmental zones would no longer need prior approval for environmental protection and fire prevention. Vietnam’s minister of planning and investment, Nguyen Chi Dung, calls it a new era in the semiconductor industry the government is preparing for.
The semiconductor industry is a vital component of the global economy, especially in Asia, where countries are trying to secure their position amid geopolitical tensions. China and the U.S. are at odds, placing Southeast Asian nations on a difficult path to secure their supply chains.
The US itself is undergoing heavy reinforcement through initiatives like the CHIPS Act. Similarly, the European nations are strengthening their supply chains.
In this unpredictable global climate, Southeast Asian countries are demonstrating a proactive approach. By revising their semiconductor strategies, they hope to shield themselves from the uncertainties that accompany changing U.S. policies while also solidifying their roles in the global technology supply chain.
