2026 Update on Indonesia's Objective to Become Asian Semiconductor Hub

23 Jul 2026 Insight Jakarta

Article - By Abimata Putra Ruth Ginting

In October 2024 we first discussed Indonesia's plan to become an Asian semiconductor hub (see here). In March 2025 we provided an update on developments (see here). Since then, Indonesia has taken further steps towards building its domestic semiconductor ecosystem. The government has crystallised its roadmap¹ by identifying both short- and medium-term programmes, and potential government support.

The three focus areas for the short-term programme are (i) building Indonesia-based fabless/chipmaker designs, (ii) developing high-tech workers, and (iii) building silica smelter plants.

For the medium-term programme, the roadmap acknowledges that Indonesia will need to attract high-tech investment and knowledge transfer from established global technology companies, with the government planning various measures to support this.

Where does demand currently sit?

A 2025 study by the Institute for Economic and Social Research, Faculty of Economics and Business at Universitas Indonesia indicates that demand is primarily driven by two industries: electronics (mobile phones, computing, gaming equipment, etc) and automotive (including both conventional and EV vehicles). Other drivers include medical devices, agricultural devices, and payment cards.

Progress report

Several short-term programme developments and successes are summarised below.

In August 2024, the government inaugurated Wiraraja Green Renewable Energy & Smart-Eco Industrial Park in Batam (the Project). The Project has since been designated as a national strategic project and an industrial zone intended to serve as a hub for Indonesia’s semiconductor ecosystem. This Project gained further momentum in February 2026 when strategic investors including Essence Global Group and Tynergy Technology Corporation USA agreed to invest in the Project².
The Project owner has signed a memorandum of understanding with Politeknik Negeri Batam on upskilling initiatives for local engineers in Batam³. While construction was initially targeted to commence in January 2026, as of March 2026, development had been delayed by land clearance issues⁴.
The Project is closely connected with Indonesia’s broader policy of developing a domestic silica-processing industry. Silica or quartz sand is a key upstream input for producing high-purity silicon used in semiconductors, as well as for solar panels and other advanced manufacturing products. In December 2025, the Ministry of Industry launched its Silica Downstreaming Roadmap 2025–2045, which envisages the phased development of silica-based industries and supporting facilities across 10 industrial estates.⁵
However, there is still no clear regulatory direction on the proposed nationwide ban on exports of silica or quartz sand, which was first raised in 2023 with an implementation target of 2027. Minister of Trade Regulation No. 6 of 2026, which became effective on 1 April 2026 and amended the list of goods prohibited from export, failed to extend the export prohibition to include silica and quartz sand.
In February 2026, sovereign wealth fund Danantara and semiconductor company Advanced RISC Machines (ARM) agreed to launch the Arm Total Access Programme for Indonesia⁶, which envisages the roll out of scalable training programmes for up to 15,000 Indonesian engineers, focusing on chip design capabilities. The partnership marks an important step in Indonesia’s semiconductor ambitions, recognising that moving into higher-value segments of the global supply chain will require not only raw materials and manufacturing investment, but also a strong pipeline of specialised engineering talent and domestic technological capabilities.
In parallel with the Danantara-ARM partnership, a Polytron-led non-profit initiative called the Indonesia Chip Design Collaborative Center (ICDEC) has started rolling out initiatives with more than 13 partner universities in Indonesia, supported by the Ministry of Industry⁷. In 2025 the first batch of 50 college students completed the chip design training. Additionally, the government has initiated an ADB-linked blue book financing plan of USD16.2 million, targetting development of the national semiconductor ecosystem by focusing on chip design capability, with the primary objective of increasing Indonesia's ability to create locally designed chips.
From a workforce-planning perspective, the Ministry of Labour has issued local competency standards for semiconductor-related jobs (design, fabrication, chip assembly), referred to as SKKNI 130/2024. The new standards provide a framework for job training and upskilling, including fostering collaboration between universities and industry players.

Summary

Overall, Indonesia has made tangible progress in developing both the talent and institutional foundations needed for a domestic semiconductor industry. However, important elements of the ecosystem are still at an early stage, including silica processing, physical manufacturing capacity, and the regulatory framework needed to secure the domestic supply of raw materials.

We will continue monitoring developments. In the meantime, please reach out to your usual contact if you have any questions.

Footnotes

Key contacts

Abimata Putra

Partner

Stay in the know

Receive timely insights and briefings from HSF Kramer, tailored to keep you informed and ahead

Subscribe now