Asia's AI hardware boom has a winners' list, and Indonesia is not on it

The data centres going up around the world have to be filled with machines, and someone has to make them. Robert Walker, an economist at the Lowy Institute writing for Fulcrum, the commentary site of Singapore's ISEAS institute, cites forecasts that global data centre capacity will grow about 24.6 per cent a year from 2025 to 2027 and could double by 2030, adding one to two trillion dollars in equipment orders. The most advanced parts come from Japan, South Korea and Taiwan, where factories are already full. Memory chip costs are up 300 per cent this year. Southeast Asia's opening is at the simpler end, especially assembly, testing and packaging: the last stage of chipmaking, where finished chips are cut from the wafer, wired up, sealed and checked before they ship.

Walker's list of who is already placed for that work is short. Malaysia, the Philippines, Singapore, Thailand and Vietnam hold what economists call a comparative advantage in chip exports, meaning this is the thing they are relatively best at selling. Indonesia is not on the list. Walker puts it with Cambodia as "less exposed to this boom" and says both "should get on board quickly." He points to an Asian Development Bank finding that exports of AI-related goods are the main channel through which developing economies in the Asia-Pacific can turn the AI boom into actual output and jobs at home.

Two warnings sit alongside the pitch. Southeast Asia's factories are more exposed to an oil shock than China's, the region's main rival for this work, so Walker wants the shift to cleaner power sped up. And China's own semiconductor imports fell by more than a fifth between 2021 and 2024 as it built its domestic supply, so the region cannot assume Chinese buyers will fill the gap. His advice to governments is unusually restrained: skip the big public cheques, supply the skills, the infrastructure and a workable business environment, and watch for "incentive shopping", where chip firms tour the region collecting tax-break offers. He wants an ASEAN mechanism so members stop bidding against each other for the same factory.

Why it matters

Indonesia has spent this month reading bad financial news, and this is the rare regional story where money is moving toward Southeast Asia rather than away from it, with five neighbours in line ahead of Jakarta. If you are choosing a technical course or a career, the work being described is electronics assembly and testing, not software. When the next data centre deal is announced, the thing to look for is whether it brings component or testing lines with it, or only server halls, because only the first kind builds an export business that outlasts the building.