RI Pursuing a Dual Approach Strategy in the Development of Semiconductor Ecosystem

To address the growing demand in the domestic market, the government is actively working to expedite the development of the semiconductor industry ecosystem. This effort includes the formation of a Semiconductor Ecosystem Preparation Task Force.

Fatkhul Maskur

31 Mei 2024 - 11.31
RI Pursuing a Dual Approach Strategy in the Development of Semiconductor Ecosystem

Indonesia once had a semiconductor factory in 1986. /

Bisnis, JAKARTA – An internal meeting at the Presidential Palace on Thursday (16/5/2024) focused on preparations for Indonesia as member of Organization for Economic Cooperation and Development (OECD). Among the key topics discussed was the nation's semiconductor industry.

Semiconductors emerged as a strategic focus during the meeting, apart from critical minerals. This emphasis is timely, as the OECD recently dispatched a fact-finding mission to Indonesia to evaluate the country's semiconductor ecosystem in the middle of this year.

"Indonesia must revitalize its semiconductor ecosystem," said Coordinating Minister for Economic Affairs Airlangga Hartarto after attending the meeting.

In response, OECD Secretary General Mathias Cormann, during a meeting with President Joko “Jokowi” Widodo at the Bogor State Palace on Tuesday (28/5/2024), committed to supporting Indonesia in developing a semiconductor industry ecosystem.

"Earlier in the conversation between Bapak President and Secretary General Cormann, we also discussed how the OECD will assist in developing our semiconductor ecosystem," said Coordinating Minister Airlangga.

The OECD will study the implementation of the digital roadmap process in ASEAN, including the Digital Economy Framework Agreement (DEFA), as part of its learning process.

Minister Airlangga added that at the end of 2024, Secretary General Cormann is scheduled to visit Indonesia again to launch the Indonesian Economic Survey.

This survey is a form of OECD support for Indonesia to enhance its investment climate and achieve parity with OECD member countries in regulatory development. The goal is to ensure that investors continue to see Indonesia as an attractive investment destination.


The government is striving to accelerate the development of the semiconductor industry ecosystem to meet growing domestic market demand by establishing Semiconductor Ecosystem Preparation Task Force.

The inauguration of this task force was formalized through the Decree of the Coordinating Minister for the Economy Number 16 of 2024, issued on January 4, 2024.

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The Semiconductor Task Force emphasizes the importance of synergy among all stakeholders to formulate a comprehensive and sustainable strategy for creating a conducive business climate and encouraging investment in the semiconductor industry.

"This task force was formed to address the rapidly growing needs of the semiconductor industry and to create a new economic growth engine for Indonesia," said Deputy for Coordinating International Economic Cooperation Edi Prio Pambudi, Chair of the Task Force Implementation Team, at the Kick-Off Meeting on Tuesday (26/3/2024).

In developing the semiconductor industry, enhancing human resources is a fundamental need. Increasing the quality and quantity of human resources in semiconductor technology is a priority to maintain the industry's competitiveness and independence.

By strengthening investment and focusing on human resource development, the Semiconductor Task Force is committed to ensuring that a skilled and qualified workforce is ready to support the sustainable and innovative growth of the semiconductor industry.

"Germany possesses extensive expertise and experience in the semiconductor industry, and we are prepared to assist students and professionals in Indonesia by providing training, further education, and even internships at leading German semiconductor companies," stated the Indonesian Ambassador to Germany, Arief Havas Oegroseno.

Airlangga mentioned that in the development of the semiconductor industry, the first step to enter the semiconductor value chain is the enhancement of logic design, which requires high-quality human resources.

However, efforts to augment investment in the semiconductor sector must also progress concurrently. In essence, the government will execute a dual strategy, focusing on both human resource development and investment attraction, simultaneously.


Indonesia once owned a semiconductor factory back in 1986, which managed to export chips worth up to IDR 135 million. Therefore, the endeavor to revive the semiconductor industry in the era of artificial intelligence (AI) presents a significant opportunity.

"We need a roadmap for the next 10-20 years concerning the semiconductor industry that can meet domestic demands," stated Taufiek Bawazier, Director General of Metal, Machinery, Transportation Equipment and Electronics (ILMATE) of the Ministry of Industry, Jakarta, on Thursday (8/12/2022).

Expert Staff to the Minister of Industry for Capacity Strengthening of the Domestic Industry Ignatius Warsito highlighted the significance of the semiconductor industry in producing essential technology components amid megatrends like remote working, AI, and electric vehicles (EV).



"Semiconductors serve as crucial components in electrical or electronic devices, including diodes, integrated circuits (ICs), and transistors," he emphasized.

Silicon serves as a major material for the semiconductor industry. It is derived from processing silica raw materials (SiO2), such as silica sand, quartzite, and quartz stone, utilizing diverse processes.

"Currently, Indonesia lacks a silica processing industry for silicon wafers (1-5),” he remarked. Therefore, the Ministry of Industry remains committed to overseeing strategic industries across the upstream, intermediate, and downstream sectors, including the semiconductor industry.

According to him, investment in upstream-intermediate industries such as MG-Si with a capacity of 32,000 metric tons per year requires $ 300 million. The polysilicon industry with a capacity of 6,500 metric tons per year requires $ 373 million. Meanwhile, the monocrystalline ingot and silicon wafer industry requires an investment of $85 million.

President Director of PT Astra Visteon Indonesia Prihantanto Agung stated that the semiconductor industry produces item that is small but crucial in the automotive production process. "It's a small item that only costs $0.1, but it can make us sell cars worth hundreds of millions."

Amid the pandemic, the global semiconductor supply chain faced disruptions, significantly impacting the automotive sector in Indonesia. "This is adversely affecting our industry," he remarked. The price of semiconductors, which previously hovered around $0.1, skyrocketed to $9-$25.

Country Manager of STMicroelectronics Indonesia Slamet Wahyudi highlighted that the primary raw material for semiconductors, foundry, is dominated by TSMC at around 56%, followed by Samsung at 16%, UMC at 7%, Global Foundry at 6%, SMIC at 4%, with other manufacturers controlling 12%.

"The manufacturing process post-foundry involves several processes conducted by robots under human supervision. There are several Indonesians engaged in the research and development (R&D) sector," noted Slamet.

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He further emphasized that the semiconductor ecosystem must enhance the R&D process to foster development and commercialization. This effective measure has already been adopted by Singapore and Malaysia.

According to Intel's estimations, constructing a manufacturing plant in the 2020 period entails an investment ranging from $10 billion - $15 billion. "This figure represents a significant increase compared to 2010, when the investment value stood at $6 billion," highlighted Fransiskus Leonardus, Director of Enterprise at Intel Indonesia Corporation.

Intel Indonesia is fully committed to bolstering the development of the semiconductor industry in Indonesia, particularly by supporting the cultivation of human resources capable of chip design.

"In the semiconductor design process, what requires bolstering is the R&D aspect, including the enhancement of human resources. Currently, there have been no semiconductor designs made in Indonesia. In contrast, neighboring countries like Malaysia have already developed their own designs. In fact, a single country can boast more than 20 designs,” emphasized Francis.


The Ministry of Industry is actively engaged in establishing an Integrated Circuits (IC) Design Center in Bandung, West Java. According to Warsito, this initiative will incorporate all universities and academic institutions into the ecosystem scheme.

Gede Priana Dwipratama, Young Expert State Defense Analyst at the Directorate General of Defense at the Ministry of Defense, noted that the construction of the IC Design Center aligns with Indonesia's positioning in the Highly Integrated Semiconductor Value Chains scenario outlined in the Hinrich Foundation report.

The advancement of dual-use national semiconductor technology necessitates intensive research endeavors aimed at fostering the growth of a superior national scientific culture.

It is anticipated that the IC Design Center will mirror the likes of the National Semiconductor Technology Center (NSTC) or the United States National Semiconductor Technology Center, which are dual-use facilities involving not just one state agency.

The mastery of technology stems from the development of technology through national research synergy, encompassing universities and research institutions, government and private institutions (research institutions), as well as users and industries of key defense equipment.

Moreover, the mastery of semiconductor technology, particularly for military and defense purposes, is anticipated to be achieved through defense industry collaboration via foreign technology transfer. This entails joint product design and engineering (joint development), joint ventures, joint operation, and the IDKLO overseas procurement scheme (offset).

Mastery of national semiconductor technology in defense and security equipment products can further increase the independence of the Indonesian defense industry, especially in core technology.

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