China's Reopening to Power Southeast Asia's Chip Industry

China's Reopening to Power Southeast Asia's Chip Industry
Photo by QuantFoto

Moody’s Analytics predicts that the reopening of China will drive demand for electronics from suppliers in Southeast Asia, the Philippine newspaper Business Word reported.

While countries like Vietnam are known for providing low-cost alternatives to China for consumer goods assembly, Malaysia, the Philippines, and Thailand stand out as major exporters of semiconductors and other electronic components. Moody’s Analytics, a financial service company, notes that these exports are increasingly going to China and that the country's growing consumer economy will only accelerate this trend.

Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) forecasts 5% growth in the Philippines' top export, electronics and semiconductors, this year, lower than the initial 9% target, due to an anticipated global recession. In 2020, the exports of electronics only grew by 6.88%, missing the 10% target.

Moody's Analytics noted that Southeast Asian economies, with a mix of manufacturing and commodities, have less dependency on China's domestic demand than emerging giants like South Korea and Taiwan.

Business World reported that the region's growing specialization in semiconductors and other immediate electronic components will bind it tighter to China.

China has set its economic growth target at approximately 5% for this year, with a focus on boosting domestic consumption, Axios reported on Monday.

China's GDP expanded by a meager 3% last year due to a series of COVID restrictions and an increasingly strict regulatory environment, marking one of the lowest growth rates in decades.

But the latest data suggests that the Chinese economy has shown signs of recovery since the government abandoned its anti-virus measures last December.

China’s reopening after a strict zero-COVID policy that has kept foreign businessmen out of the country, is also expected to boost tourism, business travel, demand for commodities, and trade.