Where Are Semiconductor Investments Going?
How Asian countries’ strategies compare to the offerings from other global regions.
The semiconductor industry expects annual growth of 6-8% through 2030, spurred by rapid technological development and increased demand for the chips that power the world. Meanwhile, governments around the globe are trying to invent the most attractive incentives packages in the hopes of luring investors in this strategic industry. In the last two years, the six largest global semiconductor companies have pledged over US$324 billion in global investments in Germany, Italy, Taiwan, Malaysia and the United States due to their commitments to labor, generous incentives and legacy manufacturing ecosystems.
The U.S. CHIPS and Science Act is making available roughly $280 billion in funding for incentives, workforce development and strengthening American manufacturing and has incentivized projects from Taiwan Semiconductor Manufacturing Company (TSMC), Micron, Intel, Texas Instruments and Samsung, among others. The $1.4 billion Texas CHIPS Act is doing its part at the state level, as is Arizona’s National Semiconductor Economic Roadmap.
The European Union’s $43 billion European Chips Act addresses skills shortages and aims to increase production capacity to 20% of the global market by 2030. Italy’s multi-billion-dollar Chips Fund has driven the development of the $240 million Integrated Circuits design center focused on upskilling Italian labor and chip technologies. This plan has also helped to attract foreign investors such as Silicon Box’s $3.5 billion chip plant project. Silicon Box Head of Business Mike Han said Italy was chosen “due to their commitment to infrastructure, building a strong talent base, and the government’s initiative to streamline the business environment.”
Germany, meanwhile, is home to 10 of the 16 microchip plants in the EU and is seeing more than $51 billion in investments from Intel (Magdeburg), TSMC (Dresden), Infineon (Dresden) and Wolfspeed (Saarland) alone. Germany’s investment of $53 billion has taken a more direct focus on upskilling and increasing labor participation. Europe’s largest economy is also reforming its immigration laws, making it easier for MNCs to set up operations with direct access to the global market.
Taiwan Leads in Wafers, India’s On the Rise
Asia strategically positioned itself along the semiconductor supply chain by offering competitive labor prices and technical manufacturing. A prime example is Taiwan, which ranks number one in global OEM wafer production. Taiwan has created the 5+2 Innovative Industries Plan exploring nominal semiconductor technologies through domestically and internationally incentivized R&D, making companies such as TSMC a powerhouse and highly coveted investor overseas.
Malaysia’s National Semiconductor Strategy has committed $5.3 billion in fiscal support and targeted incentives for foreign investors while upskilling 60,000 high-skilled Malaysian engineers. Penang alone received $12.8 billion in semiconductor investments in 2023.
In August 2024, Vietnam established a Semiconductor Steering Committee aimed at positioning the country higher on the semiconductor value chain. Beyond the nation’s commitment to training 50,000 chip design engineers and hundreds of thousands of technical workers by 2030, Vietnam is in an ideal geographic location with 70% of the world’s semiconductor industry accessible within a 4- to 5-hour flight.
While Southeast Asia is attracting significant foreign investment, China has shifted its focus inward. Through its “Made in China 2025” initiative, the country aims to reduce reliance on foreign technology by fostering domestic innovation, boosting R&D and enhancing export competitiveness for essential components and the final semiconductor product. China is rapidly advancing this goal by distributing subsidies, low-interest loans and bonds. Recently, the Chinese government announced it largest-ever semiconductor state investment fund worth $47.5 billion. Unlike efforts in other world regions, China’s initiatives are not primarily aimed at attracting foreign direct investment.
Multinationals’ regionalization strategies have started to shift toward India, as the nation’s semiconductor market reached a value of $22.7 billion in 2019 and is expected to quadruple to US$110 billion by 2030. This growth is fueled by the country’s robust, technology-driven market and its deep talent pool. Like China, India aims to reduce its dependency on imports to enhance domestic competitiveness while also still keeping the door open for foreign investors.
India’s “Semicon India” program and the “Semiconductor Mission” align with broader national initiatives such as “Make in India” and “Atmanirbhar Bharat,” which focus on boosting domestic manufacturing for both national and global markets. Semicon India, valued at $10 billion, seeks to incentivize manufacturers to establish semiconductor and display fabrication units and invest in R&D and design capabilities. Moreover, the government’s recent announcement to modernize the Semiconductor Laboratory in the State of Punjab through an investment of $1.2 billion, along with its vision of 5G deployment across the country, a semiconductor Production-Linked Incentive (PLI) scheme and 100% FDI in the sector, will boost growth and take India one step closer to being a major player in the industry.
India’s semiconductor market is expected to quadruple to $110 billion by 2030.
Furthermore, companies and joint ventures planning to establish semiconductor fabs in India, at any stage of development (including mature nodes), are eligible for a fiscal incentive covering 50% of the project cost. Similarly, a fiscal incentive of 50% of the project cost is available for setting up display fabs utilizing specified technologies within India. Among recent projects is an $825 million, 5,000-job assembly and test complex from Micron in Gujarat.
Beyond traditional tax and infrastructure incentives, India is adopting a strategic partnership approach, including agreements with the EU and Japan. These collaborations offer tactical advantages in areas such as manufacturing, equipment research, design, talent development and supply chain management. Moreover, they position India as a confident and capable partner on the global stage.
Hugh Goldstein is a research analyst based in Bangkok, Thailand, and Michael Hirou is USA country manager for Tractus. Tractus is here to assist your company in navigating the complexities of Asian expansion. Visit tractus-asia.com.