In the midst of semiconductor supply chain disruptions and shortages, Southeast Asia holds the key for future growth

It has been well documented that the semiconductor supply crisis has caused supply chain disruptions and shortages worldwide. In many cases, lead times are as far out as one year!

Semiconductors are in just about everything we use.

The auto industry has been particularly hard hit with industry leaders such as Ford, Nissan, Toyota, VW and Fiat Chrysler Automobiles announcing they are likely to miss their 2021 targets due to this shortage.

It is not just carmakers that are in trouble. The chip shortages are expected to cause widespread shortages of everything, from electronics to medical devices to technology and networking equipment.

In response to this crisis, the Biden Administration announced an executive order on February 24 calling for a 100-day review to assess vulnerabilities and areas for improvement of supply chains in four areas: pharmaceuticals, rare earth minerals, semiconductor chips and large-capacity batteries.

As the US continues to counter its dependence on China for critical supply chains, the ASEAN region and other Asian nations are good places to seek reliable partnerships and suppliers. If your business is involved in one of these key industry sectors, here are some notable facts:

• Pharmaceuticals: Singapore stands above the rest of its ASEAN neighbors with a well-developed, mature pharmaceutical market. The country has built upon a foundation with high levels of personal wealth—and has a reputation for high quality and innovative manufacturing services. The Government has further supported development with a number of schemes to drive innovation. Most recently, it committed to investing US$ 2.4 billion to improve manufacturing and engineering in pharma as part of 2020 ‘Research, Innovation and Enterprise’ plans.
• Rare Earth Minerals: Vietnam’s rare earth mineral reserves are large and stand at 22 million MT. The country reportedly hosts several rare earth material deposits with concentrations against its northwestern border with China and along its eastern coastline. The majority of rare earth minerals in the country can be found in primary ore deposits with a smaller amount located in coastal placer deposits.
• Semiconductor Chips: Many of Japan’s SMEs produce crucial parts for the semiconductor manufacturing process. Chemical manufacturing company Tokyo Ohka Kogyo is the world leader in the area of photoresists, a crucial chemical substance in forming semiconductor circuits.
• Large-Capacity Batteries: Thailand recently announced the largest test center for Lithium-Ion Batteries in the ASEAN region. TÜV SÜD has signed a cooperation agreement with Thailand’s Ministry of Industry and the Thailand Automotive Institute governing the establishment of a battery test center near Bangkok, with total investments of US$ 16.3 million.

Whether you are looking to expand your export base or are seeking strategic global alliances to mitigate risks of supply chain disruption, Tractus Asia can help. Tractus is a business strategy consulting and operations management firm dedicated to helping clients invest and thrive in Asia.