Indonesia has recently signed a joint venture agreement worth an initial 2.1 trillion rupiah (US$ 124.5 million) with UK-based global semiconductor giant, ARM Holdings in a bid to develop a national semiconductor ecosystem and strengthen its position in the global supply chain.
The deal is similar to Malaysia’s US$ 250 million plan for semiconductor IP and design blueprints to be granted by ARM signed in March last year. However, in Indonesia’s case, it is not clear what exactly will be delivered, according to reports.
Commentators speculate that it is likely to be similar to Malaysia, namely obtaining semiconductor IP and design blueprints. Additionally, it will very likely bundle into the deal a U.S.-sponsored Arizona State University program that supports Indonesia’s assembly, testing, and packaging (ATP) capabilities which is on par with Malaysia and Vietnam.
However, fab construction will not be included, according to reports. Upstream fabrication which requires a much larger capital, remains in Taiwan and South Korea.
Semiconductors are essential components in data centers, electronics and automotive industries with rising demand in both consumer and industrial applications.
Last month, a consortium of companies from Indonesia, the United States and Germany, had announced plans to develop semiconductor, silica-sand and advanced glass manufacturing facilities valued at USD 26.7 billion, on Galang Island in Batam, Indonesia.
Indonesia’s BRIN (National Research and Innovation Agency) is the agency tasked with procurement for this ARM joint venture national strategic project.