Amid the high-stakes race between the world’s largest economies to develop the next generation of semiconductors, Southeast Asia, collectively representing the fifth-largest global economic region, is well-positioned to play a central role in the global semiconductor market. With its strategic location, robust manufacturing capabilities, and growing technological expertise, the ASEAN region is emerging as a pivotal player in semiconductor development and production.
ASEAN’s Role in the Global Semiconductor Market
The ASEAN region is becoming increasingly significant in the semiconductor supply chain, driven by its competitive labor costs, supportive government policies, and burgeoning demand for electronic products. Countries like Malaysia, Singapore, and Vietnam have established themselves as key hubs for semiconductor manufacturing and assembly, attracting substantial foreign investments. Southeast Asia’s strategic advantage lies in its ability to integrate into the global supply chain seamlessly, offering a blend of cost efficiency and advanced manufacturing capabilities.
Success Stories and Business Opportunities in Thailand
Thailand, in particular, is excelling in the semiconductor industry, leveraging its strong industrial base and proactive government initiatives. The country’s Eastern Economic Corridor (EEC) is a prime example of Thailand’s commitment to becoming a technological hub. This special economic zone is designed to attract high-tech industries, including semiconductor manufacturing, with incentives such as tax breaks and streamlined regulatory processes.
Key Success Stories:
1. Delta Electronics (Thailand) Public Co., Ltd.: A leading electronics and semiconductor manufacturer, Delta Electronics has been pivotal in driving Thailand’s semiconductor capabilities. The company has expanded its production facilities in Thailand, making it a significant player in the global semiconductor market.
2. Western Digital: With major manufacturing operations in Thailand, Western Digital has contributed to the country’s reputation as a reliable hub for semiconductor and electronic components.
Business Opportunities:
✓ Investment in Advanced Manufacturing: Thailand’s focus on Industry 4.0 technologies presents numerous opportunities for investors in advanced semiconductor manufacturing and related technologies.
✓ Research and Development: With supportive government policies, Thailand is an attractive destination for setting up R&D centers focused on semiconductor innovations.
Promoting Thailand’s Advantages in the Global Semiconductor Arena
Thailand’s strategic position in Southeast Asia, coupled with its robust infrastructure and supportive government policies, makes it an ideal destination for semiconductor investments. The country’s advantages include:
✓ Strategic Location: Thailand’s proximity to major markets in Asia and its well-developed logistics network facilitate efficient supply chain management.
✓ Skilled Workforce: The country boasts a skilled and adaptable workforce, trained in the latest technologies and manufacturing processes.
✓ Government Support: The Thai government offers various incentives for high-tech industries, including tax breaks, subsidies, and infrastructure support, particularly in the EEC.
✓ Stable Economic Environment: Thailand’s stable political and economic environment provides a reliable backdrop for long-term investments in the semiconductor sector.
Key Organizations:
✓ Thailand Board of Investment (BOI): The BOI plays a crucial role in promoting investment in the semiconductor sector by offering incentives and support to foreign and local investors.
✓ Eastern Economic Corridor (EEC) Office: The EEC Office is dedicated to transforming the region into a high-tech industrial hub, attracting significant investments in the semiconductor industry.
BOI Incentives for the Semiconductor Sector (Updated as of August 2024)
The Thailand Board of Investment (BOI) has introduced specific incentives to bolster the semiconductor sector, particularly focusing on the manufacture and testing of high-precision machinery and semiconductors. These incentives are designed to attract substantial investments and promote technological advancements in Thailand’s semiconductor industry. Below are the detailed incentives and requirements based on the latest BOI regulations:
3.1.5.1 Manufacture of High-Precision Machinery
1. Project Requirements:
✓ The project must include part forming processes and/or assembly processes as approved by the BOI.
2. Product Features:
✓ The machinery must apply technology used in the manufacturing of electronic products such as integrated circuits (IC), semiconductors, or microelectromechanical systems (MEMS).
✓ The product must have a production tolerance of not more than IT5, according to the International Tolerance Grades (IT).
3. Incentives:
✓ Tax holidays and exemptions for up to 13 years.
✓ Exemptions from import duties on machinery and raw materials.
✓ Additional deductions on electricity and transportation costs.
4.2.2 Manufacture or Test of Semiconductors and Integrated Circuits (IC)
Category 4.2.2.1: Large-Scale Investment
1. Project Requirements:
✓ The project must involve the manufacture or testing of semiconductors and ICs, including intermediate products and downstream products such as wafer grinding, sawing dice, wafer testing, IC testing, and IC modules.
✓ For manufacturing and testing ICs, the cost of refurbishing existing machines is considered an investment and included in the calculation of the corporate income tax exemption cap. However, the original cost of existing machines is not included.
2. Investment Requirement:
✓ The investment capital in machinery (including installation and test run costs) used in the manufacturing or testing process must be at least 1,500 million baht.
Category 4.2.2.2: General Manufacture or Test
1. Project Requirements:
✓ The project must involve the manufacture or testing of semiconductors and ICs, including intermediate products and downstream products such as wafer grinding, sawing dice, wafer testing, IC testing, and IC modules.
✓ Similar to the large-scale investment category, the cost of refurbishing existing machines is considered an investment for tax exemption calculations, but the original cost of these machines is excluded.
2. Incentives for Both Categories:
✓ Corporate income tax exemptions for a period depending on the investment scale and project details.
✓ Import duty exemptions for machinery and raw materials.
✓ Additional support for training programs, research and development (R&D), and infrastructure development within the Eastern Economic Corridor (EEC).
Thailand’s strategic location in Southeast Asia, coupled with its robust infrastructure and supportive government policies, makes it an ideal destination for semiconductor investments. The BOI’s comprehensive incentives enhance Thailand’s attractiveness, ensuring the country remains competitive in the global semiconductor market. Investors can benefit from a stable economic environment, a skilled workforce, and an integrated approach to industrial development, particularly within the EEC.
These strategic initiatives, backed by the BOI’s targeted incentives, are set to drive growth and innovation in Thailand’s semiconductor sector, reinforcing the country’s position as a key player in this high-stakes global industry.
Conclusion
As the semiconductor industry continues to evolve, Southeast Asia, and Thailand in particular, are set to play an increasingly vital role in the global market. Thailand’s strategic initiatives, coupled with its robust industrial base, position it as a key player in the semiconductor arena. For investors and businesses looking to capitalize on the growth of the semiconductor industry, Thailand offers a compelling combination of strategic advantages and growth opportunities.
By focusing on innovation, investment, and integration into the global supply chain, Thailand is poised to enhance its position and attract more significant investments in the semiconductor sector, reinforcing its status as a pivotal player in this high-stakes global industry.