Growth beyond chipmaking: Building resilience in APAC’s semiconductor industry

AI-focused investment is strengthening the region’s semiconductor economy, but resilience depends on how its specialised markets connect.

Key takeaways:

APAC’s semiconductor expansion is reinforcing existing specialisation, with advanced production staying concentrated in established hubs while other markets grow in complementary parts of the value chain.

Middle-market businesses can benefit from semiconductor growth by providing specialist services that manufacturers need to keep production running effectively.

Successful diversification will depend on whether new locations can support reliable production while also meeting rising expectations around traceability and trade compliance.

AI demand is accelerating semiconductor investment. SEMI forecasts global manufacturing equipment sales of US$165.9 billion in 2026, a 23.2% increase from 2025. In Asia Pacific (APAC), new capacity is being added to a semiconductor production system in which different countries perform very different roles.

“Asia Pacific is the most specialised and interdependent semiconductor cluster in the world.”
Max Kuo
Audit Partner
Taiwan

The region is better understood as a connected production network than as a single manufacturing base. Investment is growing, but the advanced chipmaking capabilities attracting the most demand remain concentrated in a small number of locations. Because decades of engineering expertise and supplier relationships cannot be replicated quickly, the production system is expanding selectively around established centres.

For middle-market businesses, this creates opportunities beyond chip manufacturing, particularly in the specialist capabilities needed to support new capacity.

Opportunity exists beyond chip manufacturing

“One of the most misunderstood things about this market is that companies assume they need to manufacture chips to play a meaningful role — they don't.”
Lam Le
Partner & Head of Tax and Consulting
Vietnam

Middle-market companies do not need to challenge the sector’s largest manufacturers to be a valuable part of the production system. Sally Yu, Partner at RSM in China, says it is a misconception that success depends on “pursuing the most advanced process technologies.” Kengo Maekawa, Founder & CEO at RSM Shiodome Partners in Japan, sees “greater opportunity for mid-market companies in the supporting layers that advanced production depends on.”

Korean suppliers, for example, can support advanced packaging by solving thermal or validation constraints. In Vietnam, the country’s developing semiconductor industry requires cleanroom and maintenance capacity as well as compliance support.

Specialist suppliers can become strategically important when the absence of even one component or service could disrupt an expensive production line. Their growth relies on providing capabilities that are difficult to replace while demonstrating the traceability and supply reliability required by global customers.

“Businesses looking to capture these opportunities need to start preparing early, as the region and its role in the global market continue to evolve. Those that wait risk being left behind as the next phase of growth takes shape.”
Chong Cheng Yuan
Partner & Industry Lead
Singapore

Identifying where opportunities could emerge requires a clear view of how the region’s specialist roles fit together and where production capacity can realistically spread.

Specialisation defines semiconductor production

“Few clients see APAC as a single ecosystem. A growing number recognise a division of roles,” says Takuma Kinjo, Senior Partner and CPA at RSM Seiwa in Japan. That division is visible across the region with Taiwan leading advanced foundry production, South Korea being central to memory, and Japan supplying critical materials and precision equipment. China combines mature-node scale with a drive for greater self-sufficiency and Singapore connects manufacturing with regional business functions. Malaysia and Vietnam, meanwhile, have stronger positions in back-end production.

“More and more companies are mapping the specific roles and specialisations of each important market onto their supply chains to identify concentration risks with specific counterparties.”
Takuma Kinjo
Senior Partner, CPA
Japan – RSM Seiwa

As it stands, the roles these countries own are not interchangeable. The US International Trade Administration estimates that Taiwan accounts for more than 60% of global foundry revenue and over 90% of leading-edge chip manufacturing. What’s more, its semiconductor industry generated more than US$165 billion in 2024.

Max Kuo, Audit Partner at RSM in Taiwan, describes businesses’ sentiment as “a contradictory mix of high dependence and extreme anxiety regarding Taiwan’s ‘core position’ in the supply of advanced chips and AI semiconductors.”

Rather than moving away from Taiwan, companies are maintaining access to its advanced production while also building greater resilience. “Global businesses are aware of the high risks,” Kuo adds, “but at this stage, the risk of falling behind in the AI race is more pressing. Their approach has been to maximise production capacity in Taiwan whilst investing hundreds of billions of dollars in the US, Japan, and Europe to build long-term backup systems.”

Concentration risk is not limited to advanced chip manufacturing. It also extends to the specialist materials, equipment, and supporting capabilities on which production depends. Japanese suppliers, for instance, hold around 90% of the global market in selected coater-development and heat-treatment equipment categories. Singapore also remains a substantial production hub, with its Economic Development Board reporting that the country makes one in five semiconductor equipment units worldwide. This means diversification must also account for the specialist capabilities that support production, not only advanced manufacturing.

Diversification is happening in selected areas

Companies are not relocating every part of their operations at once. Processes are being placed where production economics work and customers can be served without unacceptable regulatory exposure. Chong Cheng Yuan, Partner & Industry Lead at RSM in Singapore, says, “Businesses remain focused in the local market, but we are seeing them expand across the region, often using Singapore as an investment holding hub while locating their production operations overseas.”

“Current diversification looks less like a wholesale relocation of the semiconductor supply chain and more like a selective dispersion of production based on the role and regulatory risk of each process.”
Michael Min
Partner
South Korea

By taking a selective approach to location, businesses are building greater flexibility into their regional operations. Elayne Kuah, Partner & Deputy Industry Lead at RSM in Singapore, says "Companies are increasingly exploring nearby locations such as Johor and Batam as part of their regional manufacturing strategies. As Singapore continues to encourage higher-value activities, companies are looking to build a more integrated regional presence, combining Singapore’s strengths in headquarters, R&D, and advanced manufacturing with the growing capabilities of neighbouring markets." The result is an operating model in which headquarters, technology, and production can be distributed while remaining commercially connected.

Vietnam shows how this selective regional expansion is playing out, with investment concentrated in specific parts of the semiconductor value chain. “Vietnam may not be a substitute for Taiwan in advanced AI chips,” says Lam Le, Partner & Head of Tax and Consulting at RSM in Vietnam. “It is a location for back-end packaging and testing with selected assembly and design services.” That focus is reflected in Vietnam’s official strategy, which aims to establish at least 100 design companies and 10 packaging and testing plants by 2030.

“We are seeing companies maintain established relationships in Taiwan while also exploring alternative sourcing networks. This can include securing multiple sourcing options, diversifying shipping routes, and reviewing appropriate levels of safety stock.”
Kengo Maekawa
Founder & CEO
Japan – RSM Shiodome Partners

Infrastructure separates ambition from execution

As companies consider new production locations, the quality of the surrounding infrastructure becomes a decisive factor. Semiconductor investment can be announced before a site has reliable utilities or sufficient local capability.

“Power and water are fundamental prerequisites that determine whether semiconductor investment can be executed and production capacity expanded,” says Michael Min, Partner at RSM in South Korea. Fabrication plants require stable electricity, industrial water, and dependable grid connections when production begins, rather than added after capacity has been built.

“Companies considering new production locations across Asia Pacific are looking closely at the infrastructure, talent, and supply-chain connectivity in each market, and how these can support their operations and long-term growth.”
Elayne Kuah
Partner & Deputy Industry Lead
Singapore

Beyond physical infrastructure, manufacturers should assess whether a location has the materials, logistics, skills, and operational support needed to sustain production. New overseas operations must train staff and bring unfamiliar lines into stable production, while established facilities depend on reliable logistics because idle plants continue to absorb costs.

“The security of materials and stable supply is something manufacturers always pay close attention to, because without it production comes to a stop,” Chong says. The strongest locations will be those that can support reliable production from launch through to long-term operation.

Trade controls shape operating models

Technology restrictions are also reshaping supply chain architectures. Yu says Chinese companies are working to build “a more self reliant domestic ecosystem that reduces reliance on external technologies.”

Elsewhere, businesses are separating production for the Chinese market from production for global markets. They are reviewing where packaging and testing occur and who the final customer will be.

“Many domestic companies still face significant gaps in meeting global customers’ requirements for documentation, traceability, and compliance. However, export controls and technology restrictions represent one of the most significant external pressures on the development of China's semiconductor industry.”
Sally Yu
Partner
China

The US Bureau of Industry and Security has strengthened controls on advanced computing semiconductors and introduced additional foundry due-diligence requirements. Malaysia has also introduced advance notification requirements in specified cases involving the export, transit, or transshipment of high-performance US-origin AI chips.

In this environment, businesses should consider compliance throughout a product’s legal structure, production route, and end use. Strong documentation and traceability will be essential to managing trade-control risk and demonstrating compliance across the supply chain.

Where the next opportunities will emerge

Advanced production will remain concentrated even as selected activities spread across the APAC region. This will create openings for middle-market businesses that can solve specific production constraints or provide capabilities that larger manufacturers cannot easily replace.

The scale of those opportunities will depend on whether the conditions needed to support new capacity keep pace with investment. As the semiconductor supply chain network expands, regional resilience will rest on APAC’s specialised markets remaining connected without creating new points of concentration risk.