Indonesia-US New Ties on Semiconductor is So-So Compared to Vietnam: Expert

Viet · Nov 18, 2023

US President Joe Biden sits across from his Indonesian counterpart Joko "Jokowi" Widodo during a bilateral meeting at the White House on Nov. 13, 2023. (Photo Courtesy of Presidential Press Bureau)

Jakarta. The semiconductor cooperation under Indonesia’s freshly announced “comprehensive strategic partnership” -- also known as the CSP -- with the US is so-so compared to that of fellow ASEAN member Vietnam, according to an expert.

President Joko “Jokowi” Widodo’s recent talks with his American counterpart Joe Biden at the White House saw the upgrade of US-Indonesia relations. The leaders agreed to elevate bilateral ties from a strategic partnership to a CSP, a few months after Vietnam achieved the same diplomatic status with the US.

Despite being hailed as a historic new phase in bilateral relations, the semiconductor-related initiatives under the upgraded Indonesia-US ties are not as concrete as what Hanoi is getting.

“We do see an intent to promote semiconductor cooperation between Indonesia and the US. However, the initiatives that the Vietnam-US CSP offers are far more concrete and specific compared to ours,” Muhammad Habib, an international relations researcher at the think-tank Centre for Strategic and International Studies (CSIS), told reporters in Jakarta on Thursday.

“As a case in point, the initiatives under the Vietnam-US CSP develop the semiconductor workforce. The US has also provided an initial seed funding for this,” Habib said.

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A White House fact sheet on the Indonesia-US CSP status lays out both countries’ intent to create a “more resilient, secure, and sustainable” global semiconductor value chain. The partnership will begin with a review of Indonesia's current semiconductor system, regulatory framework, as well as workforce and infrastructure needs.

Washington says that it intends to partner with industry associations to lead US semiconductor company trade delegations to Indonesia. There is, however, no mention of funding nor any American semiconductor firm making an investment in the archipelagic country.

This is in stark contrast with the White House fact sheet on the Vietnam-US CSP announcement in September. As part of the CSP, both countries announced comprehensive workforce development initiatives in Vietnam.

The partnership sees the US and Vietnam jointly developing hands-on teaching labs and training courses for semiconductor assembly, testing, and packaging. The US agreed to provide $2 million in initial seed funding to launch the initiatives, in conjunction with future support from the Vietnamese government and the private sector.

The CSP fact sheet also shows Vietnam being quite popular among American semiconductor makers, among others, Amkor Technology. The Arizona-based company inaugurated a $1.6 billion factory in Bac Ninh last month. California-based Synopsys is launching a semiconductor design and incubation center in partnership with Saigon Hi-Tech Park. Also, California-based Marvell plans to establish a semiconductor design center in Ho Chi Minh City, according to the White House fact sheet.

“We have yet to see similar initiatives [from American semiconductor manufacturers] in Indonesia,” Habib said.

Government data shows the US became the fifth largest foreign investor in Indonesia in the first nine months of 2023. American investment in Indonesia totaled $2.4 billion over the said period, just behind Japan (around $3.3 billion).