Between Giants
Between Giants
By Mehmet Enes Beşer
The semiconductor competition is today one of the most strategic arenas of U.S.-China rivalry worldwide. The days of arcane technical supply chains and niche policymaking are over, for semiconductors today are the very lifeblood of contemporary economies—and a theater of geopolitical rivalry. The China-U.S. chip war is as much a struggle for technological leadership as it is a struggle to define the terms of the new global order. For Southeast Asia, it is an opportunity and risk. ASEAN must balance its response to rebuff increasing pressures while staking its stake in the global semiconductor value chain.
The overall atmosphere in the U.S.-China competition for chips is coercive decoupling, export bans, and national industrial policies. The United States has tightened controls on exports of advanced chips to China, those with possible military applications. Washington has also attempted to ban China from obtaining key manufacturing tools and technologies, including deep ultraviolet (DUV) and extreme ultraviolet (EUV) lithography. As a response, China is doubling down on self-sufficiency, investing billions into building home chip capabilities with the likes of the National IC Fund and fostering local companies such as SMIC, YMTC, and HiSilicon, which is part-owned by Huawei.
There exists, nonetheless, despite all China’s goading ambitions, a gargantuan technology deficit. China continues to rely on outside inputs in terms of design software, gear, and leading-edge fabrication techniques. The U.S., meanwhile, luxuriates in overwhelming dominance with its partnership with Taiwan (TSMC), South Korea (Samsung), Japan, and the Netherlands (ASML). The chip war, however, is a continuing process. It is racing diversification, scattering worldwide supply chains, and compelling third parties to align or try to figure out how not to.
ASEAN uncomfortably sits in this new configuration. On the one hand, the region has been fortunate for so long to have close economic ties with China. Chinese investment, infra financing, and trade have exponentially increased over the past two decades. On the other hand, U.S. security ties, access to its markets, and cyber connectivity still hold so much significance for the majority of ASEAN economies. In the semiconductor sector, this ambiguity plays out theatrically.
Several ASEAN countries, such as Malaysia, Singapore, and Vietnam, already have a stake in the semiconductor value chain. Malaysia boasts big test and packaging facilities and is witnessing fresh interest from US and Japanese firms to shift away from China. Vietnam, with improving infrastructure and decreasing labor costs, is quickly becoming a center for electronics assembly as well as chip design services. Singapore remains a finance and R&D hub for foreign technology companies.
There is opportunity for the region to gain from the rebalancing of semiconductors. Strategic pressures are gathering, though. The U.S. is calling on allies to enhance export controls and redirect investment, and China is attempting to deepen ties through means such as the Digital Silk Road and the Regional Comprehensive Economic Partnership (RCEP). As these pressures become more acute, the ASEAN countries are faced with a dilemma: either to move yet further towards one side and forfeit strategic autonomy, or to stay neutral but forfeit access to useful supply chains and flows of technology.
One ASEAN regional policy on semiconductors remains elusive. Regional heterogeneity—economic, political, and strategic—overpowers collective action. Some, like the Philippines and Vietnam, are moving toward the American strategic sphere of influence. Others, like Cambodia and Laos, lean toward China. The intra-regional imbalance makes it impossible for a collective response, particularly to sensitive issues like export controls or technology transfer pacts.
But ASEAN can and should claim a regional semiconductor policy premised on three values: resilience, neutrality, and inclusiveness.
Firstly, ASEAN has to invest in semiconductor resilience through the development of its own design, manufacturing, and packaging capacity. Regional cooperation on talent building, intellectual property regimes, and supply chain mapping can reduce dependence on outsiders and enhance local value capture.
Second, the region must safeguard its strategic neutrality. Rather than taking sides, ASEAN can be made a zone of convergence—where cooperation, rulemaking, and conflict management are possible. A regional code of conduct on digital trade, data governance, and supply chain security can instill confidence in competing powers and reassert ASEAN centrality.
Third, ASEAN can utilize its position as a global partnership actor, i.e., IPEF, CPTPP, and the EU-ASEAN Digital Partnership. These partnerships provide avenues through which to attract investments, acquire technological diversification, and elevate norms without falling into the binary alignment.
Conclusion
The US-China chip war is reshaping tech geopolitics—and Southeast Asia is getting caught in the middle increasingly. For ASEAN, it’s not just a tech challenge in itself, but a geopolitical one: how not to suffer the collateral damage of a great power competition without giving up a seat at the table of regional prosperity, resilience, and sovereignty.
The area must function forward-looking. This is to invest in people, innovation, and collaboration across divisions; eschew coercive impulses but embrace strategic cooperation; and convey that ASEAN’s interest translates into nothing competitive, but balancing engagement. In the chips-‘n-might age, ASEAN must look towards not responding—but influencing emerging order on terms of its own making.