The artificial intelligence boom is no longer just a story about software models, cloud platforms, or the companies racing to build the next large language model. It is increasingly a story about where chips are made, how far they travel, and whether the supply chains behind them can withstand the next geopolitical shock.
A new FedEx report suggests semiconductor companies are preparing for a more distributed manufacturing map across Asia Pacific, as demand from AI, high-performance computing, electric vehicles, advanced communications, and data centres puts fresh pressure on chip production networks.
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According to FedEx’s “From AI to EVs: How APAC semiconductors drive the global innovation map” report, 35 per cent of semiconductor companies surveyed expect to expand manufacturing into more Asia Pacific markets within the next three years. Another 25 per cent plan to increase or diversify their sourcing.
The survey was conducted among attendees at the SEMICON Taiwan trade show. It therefore reflects the views of industry participants gathered at one of the region’s most important semiconductor events, rather than the entire global chip industry. Still, the findings offer a useful snapshot of how chip companies are thinking about growth, risk, and regional diversification at a time when semiconductors have become a strategic priority for governments and businesses alike.
Nearly four in five respondents pointed to Taiwan, Southeast Asia, Greater China, and Japan as the markets likely to see the strongest demand growth. That is a significant signal for Southeast Asia, which has historically played a quieter but critical role in the global chip supply chain through assembly, packaging, testing, and logistics.
From efficiency to resilience
For years, semiconductor supply chains were built around efficiency: specialised production in the lowest-cost or most capable locations, tight inventory management, and complex cross-border flows. That model delivered scale, but recent disruptions have exposed its limits.
FedEx said 30 per cent of respondents named geopolitical disruption as the biggest challenge to growth, ahead of costs and customs complexity. In response, companies are shifting towards geographic diversification, larger inventory buffers, and supply chains designed to absorb shocks rather than simply minimise costs.
That shift matters because chips are among the most complex products in global trade. FedEx said chip components can travel more than 25,000 miles and cross over 70 borders before completion. A single chip may involve design in one market, wafer fabrication in another, equipment or materials from several countries, packaging and testing elsewhere, and final integration into a device sold globally.
This complexity has become more consequential as AI adoption accelerates. Training and running advanced AI models require vast computing power. That in turn depends on AI accelerators, graphics processing units, high-bandwidth memory, networking chips, and the data centre infrastructure that connects them. FedEx said more than 2,000 new data centres are expected worldwide between 2026 and 2035.
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Salil Chari, FedEx’s Asia Pacific president, said the coming decade of innovation would depend on the resilience of the supply chains behind AI and digital infrastructure. The point goes beyond logistics: without reliable production and movement of advanced chips, the AI economy’s growth could run into physical bottlenecks.
Southeast Asia’s opening
The global semiconductor market is forecast to reach US$975 billion by 2026, according to the report, with Asia-Pacific accounting for roughly 58 per cent of industry revenue. China alone makes up close to 29 per cent of the global market.
Within this landscape, Southeast Asia is becoming harder to ignore.
The region does not yet rival Taiwan in advanced foundry manufacturing or South Korea in memory chips. But it has long been deeply embedded in the “back end” of chip production, the assembly, packaging, and testing stages where wafers are turned into usable semiconductor components. As chip companies look to diversify operations, these capabilities could become more strategically valuable.
Singapore, for instance, has become the world’s largest chip importer, topping US$105 billion, according to the report. That reflects its role as a regional node where components move in and out for assembly, distribution, and integration into broader electronics supply chains. The city-state also hosts semiconductor manufacturing, precision engineering, logistics, and research operations, making it one of Southeast Asia’s most mature chip ecosystems.
Vietnam is emerging quickly. FedEx said the country’s chip exports have grown at a compound annual growth rate of 32 per cent since 2006, with integrated-circuit exports reaching US$32.4 billion in 2023. Its rise is part of a wider manufacturing shift as electronics companies expand beyond China and seek alternative production bases in Asia.
Malaysia and the Philippines are not highlighted in the same figures, but they remain important players in assembly, testing, and electronics manufacturing. Malaysia in particular has built a strong position in semiconductor packaging and testing over several decades, while Penang has become one of the region’s most important electronics manufacturing clusters.
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For Southeast Asian governments, the opportunity is clear but not simple. Moving up the semiconductor value chainrequires specialised talent, reliable power, water infrastructure, industrial land, long-term policy stability, and deep links with global equipment, materials, and design firms. The capital requirements are high, and competition for investment is intense.
Asia Pacific remains the centre of gravity
FedEx’s report underlines how specialised the semiconductor map has become across Asia-Pacific. Taiwan leads advanced manufacturing with roughly 60 per cent of global foundry output. South Korea dominates memory chips. Japan supplies critical equipment and materials and holds about 30 per cent of the global equipment market. China is both a major materials supplier and a growing fabrication base.
This concentration has made Asia-Pacific indispensable to the global technology economy. It has also made the region a focal point for industrial policy, export controls, and national security debates.
For startups and technology companies in Southeast Asia, these shifts may feel distant, but they are increasingly relevant. AI adoption, cloud services, electric mobility, fintech infrastructure, robotics, and advanced manufacturing all depend on semiconductor availability. Chip shortages can delay product launches, raise hardware costs, and constrain growth in sectors that rely on connected devices or computing power.
AI accelerators and high-bandwidth memory chips now account for about a fifth of chip sales, FedEx said, making them the main growth drivers in the industry. That demand is unlikely to ease soon as enterprises, governments, and cloud providers build out AI capacity.
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The larger question is whether supply chains can scale fast enough while becoming more resilient. For Asia-Pacific, the answer will shape not only the semiconductor industry but also the next phase of digital infrastructure, electric vehicles, advanced communications, and AI-led services.
Southeast Asia is unlikely to replace Taiwan, South Korea, Japan, or China in their core strengths. But as chip companies spread risk and add capacity, the region has a chance to deepen its role in one of the world’s most strategically important industries. The next three years may determine how much of that opportunity it can capture.
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