Asia ramps up chip policies as geopolitics drive diversification
China, Japan, Korea, and India are expanding chip manufacturing and supply-chain capabilities.
Asia is stepping up semiconductor industrial policies as geopolitical tensions spur governments from China to India to build chip capabilities and attract supply-chain diversification.
The push reflects concern over exposure to supply disruptions, particularly given Taiwan’s dominance in advanced chipmaking, with about 90% of the world’s most sophisticated logic integrated circuits produced there, the report said.
The semiconductor supply chain spans design, fabrication, testing, packaging, assembly, equipment, components, materials, and chemicals, making complete national self-sufficiency difficult.
“Self-sufficiency and resilience are not achieved by becoming a net exporter or by holding a large share of wafer production,” said Stewart Paterson, Senior Research Fellow at the Hinrich Foundation.
Total state investment in China's semiconductor industry through the China Integrated Circuit Industry Investment Fund, known as the “Big Fund”, is about $100b.
Its first phase focused on basic manufacturing capabilities, including investment in Semiconductor Manufacturing International Corporation, whilst the second expanded domestic wafer fabrication.
The third phase, which began in 2024, targets higher-end semiconductors and domestic alternatives to potential supply-chain chokepoints. China also supports domestic production through below-market loans, subsidised land purchases, and preferential procurement.
China has a large presence in mature semiconductors and is a low-cost producer of several important semiconductor inputs, but depends on foreign technology and know-how.
South Korea, which ranks amongst the world's five largest semiconductor manufacturers by wafer starts, has come to dominate the high-bandwidth memory (HBM) market, a technology used in artificial intelligence (AI) systems.
The country has announced an investment plan of nearly $1t through 2040 covering memory, logic integrated circuits, and data centres. The investment will be largely funded by cash flows from Samsung and SK Hynix’s HBM businesses.
Japan has created Rapidus as a national semiconductor manufacturing champion and is developing semiconductor clusters in Kyushu and Hokkaido as it seeks to reduce critical trade dependencies.
Southeast Asian economies are targeting specific parts of the semiconductor supply chain rather than seeking complete self-sufficiency.
Singapore leads the region in semiconductor research, development, and design and has attracted higher-end manufacturing investment, including Micron’s HBM investment.
Malaysia’s National Semiconductor Strategy has attracted investment as companies diversify production away from China, whilst Thailand has benefited from Chinese and Taiwanese printed circuit board companies diversifying production.
Southeast Asia's proximity to much of the world's semiconductor production makes it a beneficiary of industry growth.
India is seeking to expand from semiconductor design and assembly into fabrication after launching the India Semiconductor Mission in 2021 with about $9b in state funding. In July 2026, it announced another $13b under “Semicon 2.0.”
India aims to meet three-quarters of its final semiconductor demand with domestically manufactured chips by 2030, initially targeting 28-nanometre mature-node production before developing leading-edge capabilities.
The fragmentation of semiconductor manufacturing could create competing standards and processes, forcing countries with limited semiconductor intellectual property to choose between rival technology ecosystems.
“An alliance of like-minded countries cooperating to alleviate dependence on Taiwan and China is more likely to yield the required results than national industrial policies pursuing arbitrary market-share targets,” Paterson said.
The US-led Pax Silica initiative covers semiconductors, AI infrastructure, critical minerals, advanced manufacturing, and logistics. As of mid-2026, 24 countries had formally joined.
The report said future semiconductor technologies could develop along different geographic lines as technology diffusion declines, with the resulting divergence affecting the compatibility of products that use semiconductors.
