November 15, 2023
JAKARTA – The United States is considering Indonesia as a partner to create a global semiconductor value chain, according to a statement from the White House on Monday.
This was laid under an agreement called the US-Indonesia Comprehensive Strategic Partnership, following bilateral talks between US President Joe Biden and President Joko “Jokowi” Widodo on Monday.
The US would begin with a review of Indonesia’s current semiconductor ecosystem, regulatory framework, workforce and infrastructure.
The US is also set to partner with industry associations to lead semiconductor company trade delegations to Indonesia, the statement says.
“The US is one of the most important partners for Indonesia. We agreed to elevate our partnership to a comprehensive strategic partnership. But most importantly, we have to give a real meaning to it,” President Joko “Jokowi” Widodo responded during the meeting with his US counterpart in the White House on Monday.
Indonesia has begun work on a road map to develop the silica industry as a starting point for building a microchip industry in the country.
Led by the Industry Ministry, the road map is scheduled to be ready by the end of next year and will serve as a reference for industrial development from 2025 to 203 as the government aims to increase the capability of onshore silicon wafer production within that timeframe.
Amid geopolitical tension with China, the US has tried to diversify the supply chain of critical commodities, including semiconductors, to various countries in Southeast Asia.
Before Indonesia, Vietnam also inked a similar agreement on Sept. 10, with the US saying it recognized Vietnam’s potential to play a critical role in building resilient semiconductor supply chains under its CHIPS Act, according to a statement from the White House.
The US also said it would further develop Vietnam’s semiconductor ecosystem.
US President Joe Biden made a state visit to Hanoi on Sept. 10 and announced investment from US chip companies, namely Amkor, Synopsys and Marvell.
The agreement lifted the US to Hanoi’s highest diplomatic status alongside China and Russia.
Following that partnership, Vietnam is holding talks with at least six semiconductor firms to boost investment in late October. The country is also exploring building its first chipmaking plant, most likely for less advanced chips used in cars or for telecoms applications, and is willing to give incentives to realize that plan, Reuters reported.
The country currently hosts the largest semiconductor assembling, packaging and testing plant of US-based major chipmaker Intel, and aims to attract more investment from the firm. However, Reuters reported on Nov. 7 that Intel has shelved its investment plan to double the operation in Vietnam, raising concerns on the stability of power supplies and excessive bureaucracy.
Aside from Vietnam, Malaysia has also become a major semiconductor hub for Intel in the ASEAN region. The firm has expressed plans to invest US$7 billion to turn the country into its primary production base in Asia, the Financial Times reported.