Indonesia to deepen role in global semiconductor supply chain

Indonesia is rolling out efforts to identify opportunities and map its natural resources to support the semiconductor industry, as part of a broader strategy to build domestic industrial capacity.

The country is also actively seeking cooperation with nations that play strategic roles in the global semiconductor supply chain, aiming to develop the industry while strengthening infrastructure for artificial intelligence (AI).

Deputy Minister of Communications and Digital Technology Nezar Patria said it is essential for Indonesia to clearly define its position within the global semiconductor supply chain in order to enhance competitiveness and promote the development of the national AI ecosystem.

Speaking at a discussion event titled" Exploring the National Artificial Intelligence Roadmap: A Foundation for Self-Reliance?" in Jakarta on December 18, Nezar noted that Indonesia’s abundant mineral resources could become a strategic advantage amid increasingly fierce global competition in AI-related industries.

To strengthen its bargaining position and participate more deeply in the global AI industry, Indonesia must effectively utilise domestic resources, particularly silica sand – a critical input for producing silicon wafers, the foundation of chips and semiconductors. Indonesia is estimated to possess around 340 million tons of silica sand reserves, he said.

Nezar added that chips and semiconductors have become strategic industries strongly prioritised by advanced economies. However, despite its resource potential, Indonesia has yet to integrate into the global semiconductor supply chain, while domestic production facilities continue to rely heavily on imported components.

To address this situation, he emphasised the need to develop downstream processing, warning that Indonesia should no longer remain merely an exporter of raw materials. At present, Indonesian silica sand is largely exported to China, Europe and Japan for processing.

Nezar expressed optimism that by effectively harnessing its resources and seizing opportunities for international cooperation, Indonesia can strengthen sovereignty in its AI ecosystem and enhance its position in the global technology value chain.