MANILA, Philippines — Southeast Asian countries such as the Philippines are expected to gain from the geopolitical tensions between the West and China, as they may land some of the tech giants relocating out of Chinese cities.
In an analysis, the International Data Corp. (IDC) said Southeast Asia as a region could capture at least 10 percent of the market for semiconductor assembly and testing by 2027.
The IDC said integrated device manufacturers from Europe and the US are considering Southeast Asia as a location for their future investments.
The IDC said outsourced semiconductor assembly and test companies are shifting their attention away from China due to geopolitical disputes. In the process, Southeast Asia should benefit from this development, attracting some of the relocating firms.
On the other hand, the IDC said Taiwan stands to lose from this capital flight as it is projected to shred four percentage points in market share between 2022 and 2027.
“Southeast Asia’s share of the global semiconductor assembly and testing will reach 10 percent in 2027, while Taiwan’s share will decline to 47 percent from 51 percent in 2022,” the IDC said.
IDC Asia-Pacific semiconductor research lead and Taiwan country manager Helen Chiang noted that the world layout for tech manufacturing is bound to change with competition between the West and China heating up.
Chiang thinks that the reshuffling of tech factories in Asia will reduce international partnerships and promote regional races for semiconductor production.
“Geopolitical shifts are fundamentally changing the semiconductor game. While the immediate impact might be subtle, long-term strategies are focusing more on supply chain reliance, security and control,” Chiang said.
The Philippines attributes more than half of its yearly exports to electronic products, particularly semiconductors. Based on data from the Philippine Statistics Authority, the country increased its electronic shipments by seven percent to $45.66 billion last year, from $42.5 billion in 2021.
In 2022, the share of electronic exports to total shipments rose to 57.8 percent from 56.9 percent, as importers ramped up their factory activities in the aftermath of the pandemic.
The Philippines is eyeing to become a digital center in Southeast Asia, with companies building data centers and subsea cables to convince tech giants to locate here.