High-tech Industrial (semiconductor and batteries)
Sections: Overview Project activity Key considerations
High-tech Industrial (semiconductor and batteries)
Sections: Overview Project activity Key considerations
Investment in the development of semiconductor fabrication plants and proactive policy environments are securing APAC and GCC as dominant high-tech regions.
Garvan Barry Regional Director, North Asia
Overview
The APAC region is solidifying its dominance in high-tech industrial construction, fuelled by a wave of investments in semiconductor fabrication plants and gigafactories. While still in the early stages, the GCC region is also stepping up its efforts to build capacity in these critical sectors. Many governments are working closely with the industry to attract investments by offering incentives and support.
The evolving semiconductor ecosystem
The semiconductor sector is one of the key priorities of governments in these regions and they are ramping up strategic support through large-scale investments, fiscal incentives, and policy reforms.
The semiconductor industry in APAC and GCC can be classified into three maturity stages. Taiwan takes an unparalleled lead in maturity, while South Korea, and Japan dominate with advanced infrastructure and global market share. India and Malaysia are rapidly expanding their capabilities, while the GCC and Australia are in the early stages of maturity, focusing on strategic investments and niche innovation.
Taiwan
Maturity stage
Established
Key characteristics
Taiwan remains the cornerstone of the global semiconductor supply chain in advanced foundry services. To cater to AI demand, TSMC plans to triple its Chip on Wafer on Substrate (CoWoS) capacity by 2026.¹
Policy support
Taiwan Passed the 'Taiwan Chips Act' in 2023, offering investment tax credits of 25% for R&D expenses and 5% for equipment.²
South Korea
Maturity stage
Established
Key characteristics
South Korea continues to lead in memory semiconductors, expanding fabrication capacity and investing in long-term competitiveness.
Policy support
South Korea offers tax credits covering up to 25% of facility costs and 30–40% of R&D expenditures and recently increased its support package to US$23.25bn.³ ⁴ It plans to invest at least US$14.4bn over 2025 to revitalize its domestic eco-friendly vehicle and battery industries.⁵
Japan
Maturity stage
Established
Key characteristics
Japan is reviving its semiconductor industry, focusing on scaling domestic fabrication through global partnerships, and strengthening its dominance in the equipment category.
Policy support
Japan announced over US$65 bn in support for the chip industry by 2030.⁶
Singapore
Maturity stage
Established
Key characteristics
Singapore hosts a full-spectrum semiconductor ecosystem, covering R&D, fabrication, and packaging, however the back end has shifted to lower-cost regions.
Policy support
Singapore recently announced plans to invest about SG$1bn for a new R&D semiconductor facility.⁷ Last year the Agency for Science, Technology and Research (A*STAR) and Applied Materials announced a new joint lab to collaborate on solutions for semiconductor equipment and creating capabilities for the local chip ecosystem.⁸
India
Maturity stage
Scaling up
Key characteristics
Driven by a skilled workforce and competitive costs, India is rapidly emerging as a hub for chip assembly, testing, and design.
Policy support
India has allocated US$10bn under its semiconductor incentive scheme (launched in 2021) to support fab construction. As of September 2024, five projects had been approved for subsidies from central and state governments.⁹
Malaysia
Maturity stage
Scaling up
Key characteristics
Malaysia dominates back-end manufacturing, holding 13% of the global assembly and testing market. It’s stable political climate, tax incentives, and cost-effective labour continue to attract multinational investment.¹⁰
Policy support
In Malaysia, the ‘New Industrial Master Plan’ (NIMP) 2030 aims to enhance manufacturing value by diversifying exports, focusing on front-end activities like semiconductor equipment manufacturing, wafer fabrication, and integrated circuit design.¹¹
KSA
Maturity stage
Emerging
Key characteristics
In the GCC, the KSA is venturing into semiconductors as part of its ‘Vision 2030’ diversification strategy. Through sovereign wealth fund investments and international collaborations, it is laying the foundation for domestic capabilities to strengthen regional supply chain resilience.
KSA’s National Semiconductor Hub (NSH) initiative, backed by over US$266 million in venture funding, aims to establish 50 chip design firms, train 5,000 engineers, and attract 25 leading industry experts by 2030.¹²
Policy support
The KSA has launched a national semiconductor hub aiming to attract 50 semiconductor firms by 2030.¹³
Australia
Maturity stage
Emerging
Key characteristics
Australia’s semiconductor ecosystem is still in nascent stage, however it is actively investing in R&D.
Policy support
ASPI’s (Australian Strategic Policy Institute) 2022 "Semiconductor National Moonshot" underpins policy support for building a domestic semiconductor industry. Focused on mature-process manufacturing, this initiative enables Australia to secure critical technologies, reduce supply-chain risks, drive innovation in AI and quantum, and create skilled jobs.
Policy driven battery sector expansion
While China continues to dominate the global battery manufacturing space, other regions are rapidly scaling up, enabled by proactive policy environments and growing demand for electric vehicles (EVs) and energy storage solutions. The global gigafactory pipeline increasingly hinges on the presence of upfront subsidies and access to critical materials.
- Japan has approved US$2.4bn for EV battery projects in a bid to build out 150GWh/yr of domestic output capacity by 2030.¹⁴
- Australia’s National Battery Strategy commits AU$523.2m to the ‘Battery Breakthrough Initiative’ over seven years, boosting local battery production.¹⁵
- India has set a target to establish 12 gigafactories by 2030 to support both EV adoption and renewable energy storage.¹⁶
- South Korea proposed the ‘Battery Industry Special Act’ (2024) to introduce direct per-unit subsidies modelled after the US ‘Advanced Manufacturing Production Credit’ (AMPC). The law also includes state-led efforts to secure critical minerals such as lithium, cobalt, and nickel.¹⁷
- Malaysia’s National Energy Transition Roadmap (NETR) supports the development of EV charging infrastructure through incentives such as a 100% Green Investment Tax Allowance (GITA) for five years and full income tax exemptions for manufacturers of EV charging equipment.¹⁰
Though governments have announced policy measures to boost battery manufacturing capacity, the current global demand–supply imbalance makes production and demand forecasting highly challenging. This uncertainty may lead to pauses or changes in gigafactory construction plans. China’s massive battery oversupply, at nearly 400% above projected demand, combined with escalating US tariffs, is reshaping production dynamics across the APAC region.¹⁸ Should Chinese manufacturers lose access to the US market due to tariffs, they are likely to redirect excess supply to neighbouring APAC countries, increasing the risk of market saturation and downward price pressure. While this presents a short-term opportunity for other APAC nations to capture displaced demand and attract investment, it also threatens to undercut local producers unless trade protections and industrial policies are reinforced.
Project activity
With policy support and a changing geopolitical landscape, there is strong momentum in project activity related to battery, semiconductor and related manufacturing in the region.
According to SEMI’s latest ‘World Fab Forecast’ report, the global semiconductor industry is set to begin construction on 18 new fabs in 2025.¹⁹ Based on project pipeline by value, Northeast Asia, including Japan, South Korea, and Taiwan, is expected to witness the bulk of semiconductor and related projects in the coming years, with India emerging as another significant hub. In relation to announced projects, Japan currently leads with four projects, followed by Taiwan with two and South Korea with one.
In the battery manufacturing domain, for the countries mentioned in this report within APAC, India leads with a project pipeline valued at US$13.1bn followed by Malaysia and Australia. Australia and Malaysia are each expected to see projects valued at around US$2.3bn. Japan has a projected pipeline worth US$6.6bn. In the GCC, the KSA and the UAE have emerging battery and related manufacturing pipelines totalling around US$4.6bn.²⁰
Key considerations
01
High water and power consumption
Semiconductor manufacturing is highly resource-intensive, with modern chipmaking demanding significantly more water and energy. A single fab can consume up to 10 million gallons of ultra-pure water daily and 100 MWh of power per hour. For example, during semiconductor manufacturing, chips must be rinsed with ultra-pure water and cooled. Energy use requirements will increase as production processes become more complex, with technologies like EUV lithography using up to 10 times more energy than older methods.²¹
This is especially significant for regions such as India, Singapore, parts of Australia, and the GCC, which are all classified as high to extremely high risk for water, by the World Resources Institute (WRI).²² As a result, access to water and stable energy supply is now a key factor in fab site selection, driving investments in alternative power sources and water recycling systems. For example, Singapore is proactively tackling that demand with heavy investments in desalination and wastewater recycling for industrial use, and Malaysia is turning to cloud seeding and investigating the potential for new dams.
Reliable power is equally essential, even brief outages can disrupt production and cause costly losses. For instance, in Taiwan, the industrial sector consumes a substantial share of electricity. This creates power related challenges in meeting the growing demand from its semiconductor and data centre sectors. This constrained grid capacity and low power reserve margins pose significant risks, but the government is actively working to expand capacity and improve grid resilience.²³
02
Skilled talent shortage
A major constraint across APAC is the lack of specialized talent. Japan faces a shortfall of 40,000 semiconductor engineers, with an ageing workforce and fewer STEM graduates.²⁴ India excels in chip design, holding nearly 20% of the global design workforce, but still lacks skilled professionals in fabrication and testing.²⁵
However, there have been efforts across the region to strengthen the talent pool. The Singapore government is supporting talent development through programs like the ‘Singapore Industry Scholarships’. The Indian government has launched the ‘Chips to Startup’ (C2S) programme which plans to train 85,000 professionals to become specialised in semiconductor chip design.²⁶
03
Labour and contractor availability
Given the complexity of large-scale fab and gigafactory projects, the EPCM (Engineering, Procurement, Construction, and Management) model is widely adopted to manage execution efficiently. However, ongoing and upcoming mega infrastructure projects in regions like India, Singapore and the KSA, along with advanced manufacturing investments in Japan and Taiwan, are intensifying competition for critical resources, especially contractors and skilled labour. Many South Korean contractors and skilled Indian workers are engaged in large projects in the GCC, putting pressure on domestic projects. Collaborating with contractors from the outset can help in navigating these challenges.
04
Supply chain
Other than the established semiconductor hubs in Northeast Asia most of the regions in APAC have limited front-end fabrication infrastructure, which restricts full-scale manufacturing. At the same time, China’s tightened export controls on critical chipmaking materials such as gallium, effective from December 2024, are heightening supply chain concerns across the APAC semiconductor industry.²⁷
Effective supply chain planning is vital for APAC’s high-tech construction market due to extended lead times and reliance on global suppliers. For example, battery manufacturing equipment requires lead times of up to 1.5 years from order to commissioning, with some companies securing orders in 2022 for projects planned through 2025.²⁰
Persistent delays in importing specialized MEP components, such as HVAC systems and cleanroom panels, from the US and Europe, have disrupted construction timelines, emphasizing the need for early-stage logistics and procurement strategies.
However, governments are pushing for resilience through localization and friend-shoring. India’s PLI scheme for ACC battery and semiconductor production includes domestic value-add mandates, encouraging supplier co-location. Meanwhile, Japanese and Taiwanese firms are adopting dual-sourcing strategies and expanding regional warehousing capacity.
05
Navigating risks and strategic constraints
Despite the accelerating momentum, geopolitical tensions remain a significant concern. Although semiconductors have largely been spared from recent US tariffs, there is an uncertainty in the market which has heightened the risk of global supply chain disruptions. This climate presents opportunities for APAC countries beyond China to attract high-tech investments by leveraging lower development costs. However, the inherent complexity of semiconductor and battery production and the limited availability of critical raw materials, often concentrated in a handful of countries, may pose constraints.
Moreover, the construction of large-scale, high-tech manufacturing projects introduces a range of challenges. These range from permitting and infrastructure to talent availability and environmental considerations, as well as an oversupply of Chinese batteries. Addressing these issues will be essential to sustaining long-term growth and resilience in the sector.
Sources
- TSMC Ramps up CoWoS Capacity across Taiwan, Projected to Nearly Triple by 2026, Trendforce, December 13, 2024
- Taiwan’s Chip Act Takes Effect in February, TSMC to Benefit from Historic Tax Incentives, Trendforce, January 16, 2025
- South Korea Expands Semiconductor Package To $23.25 Bn As Global Rivalry Intensifies, Businessworld, April 15, 2025
- Navigating the Costly Economics of Chip Making, BCG, September, 2023
- South Korea injects $14 bil to revitalize 'green' vehicle, battery industries, S&P Global, January 15, 2025
- Japan is ramping up efforts to revive its once dominant chip industry, CNBC, November 13 2024
- Singapore Flags Investment Plans From Chips to Energy in Budget, Livemint, February 18, 2025
- A*STAR and Applied Materials Announce New Joint Lab for Semiconductor Equipment and Local Supply Chain Development, Agency for Science, Technology and Research (A*STAR), SIngapore, September 09, 2024
- Five approved semiconductor units across India and projects in pipeline, The Economic times, September 09, 2024
- Malaysia's Semiconductor Strategy: Leading the Industry Forward, MYStartup, Malaysia
- Launch of the New Industrial Master Plan 2030 (NIMP 2030), Malaysian Investment Development Authority (MIDA)
- Epic Semi Partners with National Semiconductor Hub to Accelerate Semiconductor Innovation in Saudi Arabia, Epic Semi, August 27, 2024
- Saudi Arabia launches ‘National Semiconductor Hub’ to drive industry localization, Arab News, Updated June 05, 2024
- Japan approves $2.4bn for EV battery projects, Argus media, September 06, 2024
- Charging Australia’s renewable future through the National Battery Strategy, Department of Industry, Science and Resources, Australia, May 21, 2024
- India’s giga factory plan boosts clean energy target, Ministry of External Affairs, Government of India
- Korea eyes laws akin to US AMPC to offer subsidies for its battery makers, The Korea Economic Daily, Mar 21, 2025
- China Already Makes as Many Batteries as the Entire World Wants, Bloomberg NEF, April 19, 2024
- Eighteen New Semiconductor Fabs to Start Construction in 2025, SEMI Reports, SEMI, January 07, 2025
- Globaldata
- How to Improve Power Reliability for Semiconductor Fabs, Schneider Electric, November 15, 2021
- 25 Countries, Housing One-Quarter of the Population, Face Extremely High Water Stress, World Resources Institute, August 16, 2023
- Nation’s power consumption to grow at 2.5% rate, Taipei Times, Jul 16, 2024
- Japan’s Chip Challenge: Semiconductor Policy for the Data Centre Era, The Centre for Emerging Technology and Security (CETaS), June 07, 2024
- India's semiconductor industry faces supply chain and limited talent challenges: Jefferies report, The Economic Times, March 25, 2025
- Government of India Spurs Chip Manufacturing with Fiscal Support, Global MoUs and Talent Development Initiatives, Press Information Bureau, India, April 02, 2025
- China Imposes Its Most Stringent Critical Minerals Export Restrictions Yet Amidst Escalating U.S.-China Tech War, Center for Strategic & International Studies, December 04, 2024
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