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ASEAN's Strategic Shift: Capitalizing on China's Overcapacity Through Selective Sectors and Geopolitical Leverage

Rhys NorthwoodThursday, May 15, 2025 9:37 pm ET

122min read

The global manufacturing landscape is undergoing a seismic shift. As China faces overcapacity in key industries and U.S. protectionism reshapes trade dynamics, ASEAN nations are emerging as the new nexus of industrial resilience. This article unveils how select Southeast Asian countries are capitalizing on their geographic, resource, and policy advantages to carve out dominant positions in EV batteries, semiconductors, and clean energy—sectors critical to the post-pandemic supply chain reconfiguration.

EV Batteries: ASEAN’s Lithium-Free Path to Dominance

While China produces 80% of the world’s lithium-ion batteries, ASEAN is sidestepping reliance on scarce lithium through nickel-driven innovation and strategic partnerships.

Indonesia: The world’s largest nickel producer is leveraging its reserves to fast-track EV battery manufacturing. The Hyundai-LG-IBC 10 GWh plant (2024) exemplifies how local content mandates and joint ventures are insulating ASEAN from lithium shortages.
Thailand: As Asia’s EV production hub, Thailand’s BMW Gen-5 battery plant (Rayong) highlights its role in high-value assembly. Thai policies like the EV3.5 subsidy scheme (offering up to USD 2,794 per vehicle) are fueling adoption, with EV registrations surging 380% in 2023.

Investment Play: Target firms with nickel-based battery tech and ASEAN partnerships.

Semiconductors: ASEAN’s ATP and R&D Advantage

The region’s Assembly, Testing, and Packaging (ATP) expertise, paired with geopolitical agility, positions it to absorb U.S. semiconductor demand displaced from China.

Malaysia: Intel’s USD 7 billion ATP expansion underscores Malaysia’s role as a global back-end hub. Its Kulim Hi-Tech Park hosts 50+ semiconductor firms, contributing USD 12 billion annually.
Vietnam: With Resolution 98/2023/QH15, Vietnam offers a 150% R&D tax deduction for green projects. Samsung’s USD 1.5 billion semiconductor plant and Amkor’s USD 1.6 billion investment signal Vietnam’s rise as a low-cost ATP leader.

Investment Play: Back firms benefiting from ASEAN’s ATP scale and U.S. tariff exemptions.

Clean Energy: ASEAN’s Solar and Geothermal Breakthrough

Decarbonization is not just a trend—it’s a strategic weapon against fossil fuel volatility. ASEAN is deploying renewables to diversify its energy mix and attract green capital.

Vietnam: Leading solar adoption with 18 GW installed capacity by 2023. Its floating solar farms and offshore wind projects (e.g., Song Doc 1) bypass land constraints.
Indonesia: Geothermal pioneer with 5.6 GW capacity and ambitions for 26.65 GW floating solar by 2030. Partnerships with ADB and international firms are unlocking funding for grid modernization.

Investment Play: Prioritize solar developers and geothermal players with PPAs (Power Purchase Agreements).

Mitigating Risks: ASEAN’s Geopolitical Shield

To counter U.S.-China tensions, ASEAN is:
1. Leveraging RCEP: The trade pact’s tariff cuts (covering 30% of global GDP) reduce supply chain costs.
2. Diversifying Supply Chains: Local content mandates (e.g., Indonesia’s nickel requirement for EV subsidies) ensure domestic integration.
3. Tech Partnerships: Singapore’s ASTAR and Thailand’s EVAP are accelerating R&D to leapfrog dependency on Chinese tech.

Call to Action: Deploy Capital Where Resilience Meets Growth

The window to capitalize on ASEAN’s strategic shift is now. Investors should prioritize:
- Nickel-driven EV battery firms (e.g., VinES in Vietnam).
- ATP specialists with U.S. demand exposure (e.g., Amkor Technology).
- Solar developers with ASEAN’s fastest-growing markets (e.g., Vietnam’s Song Doc 1 project).

The Bottom Line: ASEAN is not just adapting to global trade shifts—it’s leading them. With its resource-rich ecosystems, policy-driven growth, and geopolitical agility, the region offers unparalleled opportunities to profit from China’s overcapacity and U.S. reindustrialization. Act decisively before the competition catches up.

Invest now in ASEAN’s future—or risk being left behind in its wake.

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