Asia’s tech hub is thriving, turning Southeast Asia into an important member of the global tech industry amid rising tensions between the United States and China. With the tensions, companies are rethinking their operation strategies. From 2020 to 2023, Malaysia and Vietnam have enjoyed more than $100 million in investments, with more on the way. These investments were for the sole purpose of building supply chains that bypass China, AI development, and semiconductor factories.
Despite the benefits being uneven, the new shift is creating jobs and bringing in the needed income. However, the economic effects cannot be overlooked, with the national grid strained, property prices increasing, and most high-paying jobs going to foreign experts. According to Malaysia’s former deputy minister of trade and investment Ong Kian Ming, the first US-China tensions under Trump pushed firms to adopt a China+1 strategy. The strategy involved expanding their companies outside China.
Vietnam’s role in Asia’s tech development
Vietnam’s Bac Ninh province has greatly transformed, becoming one of Southeast Asia’s high-tech manufacturing hubs. Before now, it used to be just a quiet area that shared a border with China. Presently, it boasts factories for Foxconn and GoerTek, companies that supply high-value tech firms like Apple, Sony, and the like. These companies have a $20 million stake in the province, using it for the production of several accessories.
According to GoerTek, its new facility will provide about 50,000 jobs for residents in the province. Most vacancies are being sought among the locals, with some higher-paying roles going to the Chinese. This is because most don’t have the required degree to execute the higher-paying roles. To battle this, Vietnam says it wants to train 50,000 chip engineers by 2030. Local authorities have also begun offering housing and other incentives to drive interest among teachers and students.
Malaysia makes its case in the semiconductor industry
Malaysia is quite versed in semiconductor chip-making, owning 13% of the chip testing and packaging capacity globally. More than half of its chip exports are made in the coastal city of Penang. Between 2019 and 2023, the city saw $44 billion in foreign investments, making threefolds of its inflows from the last decade.
However, Malaysia is facing a workforce shortage, and the government is looking into training 60,000 workers to make up for the gap. Aside from that, there is the issue of power supply. Malaysia has one of the lowest energy rates, which serves the chip-making factories. Also, oil plantations are being converted into solar farms to meet rising power demands.
Kedah is another player that has emerged in the space. In 2023, Infineon Technologies launched its $7.8 billion silicon carbide plant in the region. These chips are integral for electric vehicles and renewable energy systems, putting Malaysia in pole position in the global semiconductor market. However, analysts are wary of what Trump’s policies would do to the global supply market, with the US and China being serviced by different networks.
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