The flow of semiconductor investment into Southeast Asia and India picked up through the first half of 2026, with chipmakers and contract assemblers committing to new packaging plants and test lines outside the industry's traditional base in Taiwan and South Korea. The shift centres on the back end of chip production — assembly, packaging and testing — where labour costs and land matter more than the cutting-edge lithography concentrated in East Asia.
Malaysia remains the regional anchor. The state of Penang, which the Malaysian Investment Development Authority has described as the country's semiconductor heartland, continued to attract advanced packaging projects, building on a national plan announced in 2024 that targets at least 60 billion ringgit in fab and design investment over the decade. Intel, which has operated in Penang since 1972, has been expanding its advanced packaging footprint there, while contract assemblers have added capacity nearby.
India moved from ambition to construction. Under the India Semiconductor Mission, the government has approved a cluster of assembly and test projects, including a plant in Dholera, Gujarat, backed by Tata Electronics and Taiwan's Powerchip Semiconductor Manufacturing Corporation, and an assembly and test facility in Sanand led by Micron Technology. Micron has said its Sanand operation would begin output in phases, with the first chips slated to come from the site during 2025 and 2026.
Vietnam drew its own share of back-end work. Amkor Technology opened a large advanced packaging and test campus in Bac Ninh province, and the country has positioned itself as an alternative location for assembly and testing as firms look to spread risk across more than one country.
Policy is reshaping where chips get assembled
The redistribution is partly a response to policy. Washington's export controls on advanced chips and chipmaking tools, tightened in stages since 2022, and a broader push by buyers to avoid single points of failure have pressed companies to place stages of production in more locations. Industry executives and government officials across the region have framed the moves as supply-chain resilience rather than a wholesale departure from East Asia, which still dominates wafer fabrication.
The numbers underline how concentrated the front end remains. Taiwan Semiconductor Manufacturing Company, the largest contract chipmaker, accounts for the bulk of the world's most advanced wafer output, and the most demanding fabrication continues to sit in Taiwan and South Korea. What is migrating is the labour-intensive assembly and packaging work, along with a layer of older-node fabrication aimed at automotive and industrial customers.
AI demand turns packaging into the prize
Analysts at TrendForce and other research firms have noted that advanced packaging capacity has become a bottleneck of its own, as chips for artificial-intelligence systems rely on techniques that stack and link multiple dies. That demand has given Southeast Asian sites, with their long history in conventional packaging, a route into higher-value work.
Constraints remain. Engineers with experience in advanced packaging are in short supply across the region, and several governments are funding training programmes to close the gap. Power and water supply for new plants, the pace of permitting, and competition for the same pool of skilled workers will shape how quickly the announced projects translate into shipped product.
The next markers fall later in 2026, as several of the approved Indian plants move toward equipment installation and as Malaysian and Vietnamese sites bring additional packaging lines online.