Complementary strengths – the SEA supply chain proposition
The semiconductor industry need not worry about downtrends in the economy. Demand for chips are still healthy, and if anything, are set to grow at extremely healthy rates, if current megatrends are anything to go by.
The one main challenge KC wanted to approach, was how semiconductor manufacturing has shifted from the west to the east, in the past 30 years.
KC Ang, Chief Manufacturing Officer at Global Foundries, shared this during SEMI’s annual conference in Penang, SEMICON Southeast Asia, which observers say saw an upsurge in attendee registrations compared to last year.
KC said, what we are experiencing is not just one dominant trend like we have in previous years. Rather, we are seeing several mega trends namely 5G adoption, IoT, R/VR, data centres, and next-generation electric and autonomous vehicles.
But there are industry challenges, of course.
The one main challenge KC wanted to approach, was how semiconductor manufacturing has shifted from the west to the east, in the past 30 years.
“Today, more than 75-percent of the global manufacturing capacity is located in Asia,” he said.
The ensuing tension between countries, in his opinion, has created policy responses to introduce access restrictions to intellectual property, advanced chip and chip-making equipment to hinder semiconductor development in certain countries.
“Countries are even forming alliances to secure the chip supply chain,” he said.
Globalisation, regionalisation, localisation
Is there a shift to onshoring, regionalisation and even localisation?
There already is a strain on the global supply chain, which KC sees could be mitigated with companies creating a global footprint to better serve each region. For example, Global Foundries itself has fabs on each of the U.S. Europe, and Asia continents.
Besides enabling proximity sourcing for their customers, a global supply chain gets established. There is even demand from clients for fabs in different continents, all in the name of supply chain secrurity.
Having access to alternative regions for alternative supplies, served the industry well during the pandemic, according to KC.
The SEA proposition
Southeast Asia has opportunity as a region, to leverage the ongoing shift. It is already established as a viable alternative manufacturing hub in Asia with competitive costs, young workforce accessibility and proximity to a fast-growth region that has strong cohesion.
KC opined that more government support can help to attract more investment into the local and regional semiconductor industry. He cited MIDA or the Malaysian Investment Development Authority, as a regional example of bringing in foreign investment into Malaysia and supporting homegrown local companies in the areas of IC design, wafer fabrication, IC packaging, and packaging services.
This also includes engineering partnership between research and academia and private sector to drive more innovation and knowledge transfer.
Supply chain security
According to KC, Southeast Asia countries should also leverage each others’ strengths for sourcing of material parts and services. He said that this region has capability to supply silicon materials, manufacture semiconductor wafer, package, test, and assemble, as well as assemble end products like cars and other electronics.
Southeast Asia has opportunity as a region, to leverage the ongoing shift. It is already established as a viable alternative manufacturing hub in Asia with competitive costs, young workforce accessibility and proximity to a fast-growth region that has strong cohesion.
“We can have an end-to-end supply chain within the region that will make Southeast Asia a leading hub for semiconductors and electronics,” he concluded.