Indonesia bets $150 million on drive for homegrown chip industry
Indonesia is aiming to train 15,000 engineers in chip design technology as part of an ambitious push to develop a homegrown semiconductor ecosystem and reduce the country’s heavy reliance on imported chips.
This target comes under a collaboration agreement signed this week in London between local tech firm Danantara and U.K.-based Arm Limited, a global leader in semiconductor design for automotive, data center, and artificial intelligence applications.
Coordinating Minister for Economic Affairs Airlangga Hartarto said the initiative seeks to accelerate capacity building and national independence in strategic technologies, with the government allocating an initial $150 million to the partnership.
It will develop six national chip designs covering automotive technology, the Internet of Things, data centers, home appliances, and futuristic areas such as autonomous vehicles and quantum computing. Indonesia will retain intellectual property rights for these designs.
The focus on chip design reflects a strategic choice, as Indonesia’s semiconductor ambitions have long been constrained by a shortage of skilled engineers.
The country produced 30 to 60 million mobile phones annually and is projected to import 1.57 million laptops in 2026. Imports of semiconductors surged to $4.87 billion in 2021, nearly doubling from 2020.
In the automotive sector, which assembled over 800,000 vehicles last year, electric and hybrid models consume roughly three times more chips per unit than conventional vehicles.
This also forms part of the global response to broader chip demand, with the market growing 23% from $407.9 billion in 2017 to $501.3 billion in 2021, driven by electrification, digitalization, and AI expansion.
For Indonesia, building domestic design capacity is seen as the most feasible entry point before moving to capital-intensive fabrication.
Universities including ITB, UGM, and the University of Indonesia will help develop the talent pipeline. Engineers will receive training directly from Arm’s ecosystem.
“The collaboration will continue to develop the next generation of semiconductors or chips, so that Indonesia has capabilities in the semiconductor and design fields,” said Airlangga Hartarto, Malaysia’s coordinating minister for economic affairs.
This story is written and edited by the Global South World team, you can contact us here.
