AI boom pushes chipmakers to expand across Asia Pacific, FedEx report finds

The AI boom is reshaping the semiconductor industry, prompting chipmakers to expand manufacturing across the Asia Pacific region, according to a new FedEx report. Thirty-five percent of surveyed semiconductor companies plan to expand into additional Asia Pacific markets within the next three years, while 25 percent intend to increase or diversify their sourcing. The survey, conducted at the SEMICON Taiwan trade show, highlights the growing strategic importance of the Asia Pacific region for chip production.

Geopolitical concerns, such as disruptions and costs, are at the forefront of chip companies' minds as they navigate the complex and geographically complex supply chains required for producing advanced chips. FedEx's report indicates that nearly 80 percent of respondents identified Taiwan, Southeast Asia, Greater China, and Japan as the markets expected to experience the most significant demand growth.

Southeast Asia, historically playing a crucial yet less prominent role in the global chip supply chain, is emerging as a more strategic player. The region has been deeply embedded in the back end of chip production, focusing on assembly, packaging, and testing stages. As chip companies diversify operations, Southeast Asia's capabilities in these areas could become increasingly valuable.

Singapore, for instance, is the world's largest chip importer, with imports exceeding US$105 billion. The city-state also hosts a mature chip ecosystem, encompassing semiconductor manufacturing, precision engineering, logistics, and research operations. Vietnam, on the other hand, is experiencing rapid growth in its chip exports, with a compound annual growth rate of 32 percent since 2006.

Malaysia and the Philippines, while not as prominently highlighted, remain significant contributors to the region's electronics manufacturing and assembly sectors. The report emphasizes that Southeast Asia presents a strategic opportunity for governments and businesses, but realizing this potential requires specialized talent, reliable infrastructure, and long-term policy stability.