BATAM; Two United States companies, Tynergy Technology Group and Essence Global, have officially begun a US$500 million semiconductor investment at the Wiraraja I Industrial Estate in Kabil, Batam.
The investment follows a US$31.6 billion joint venture agreement signed at the US Chamber of Commerce in Washington, DC, on Feb 18, with President Prabowo Subianto witnessing the signing.
Akhmad Makruf Maulana, president director of Wiraraja Green Renewable Energy & Smart Eco-Industrial Park (Geseip), said the initial investment phase would kick off with a groundbreaking ceremony on Wednesday.
The project will occupy a three-hectare site and is projected to create 1,000 new jobs.
“This represents the initial phase of the investment from the United States, a commitment that has been in the works for some time. We are beginning this within an existing industrial estate, specifically Wiraraja I in Kabil,” Makruf, who is also the chairman of the Indonesian Industrial Estate Association (HKI), said on Tuesday, as quoted by Bisnis.com.
Beyond advancing the semiconductor industry, the partnership also includes downstream processing of silica sand, establishing an AI-powered smart factory, and assembling sodium-ion batteries.
Once the Kabil facilities are operational, the high-tech supply chain is slated to expand into the Wiraraja Geseip National Strategic Project (PSN) on Galang Island.
The large-scale project carries significant promise for Indonesia’s future industrialisation roadmap, Makruf added.
Downstream processing of silica into semiconductors is expected to strengthen the bargaining power of Indonesia’s national industrial ecosystem in the global supply chain.
“This initiative reflects a shared commitment to supporting sustainable economic growth and reinforcing Indonesia’s position as a competitive destination for industrial investment on the global stage,” he noted.
Indonesia has vast reserves of silica sand, a key raw material for semiconductors, but still sells much of it raw, capturing only a fraction of its potential value.
High demand from the glass and construction industries is driving market growth in the Asia-Pacific region, according to a 2023 report published by market intelligence publisher Fortune Business Insights.
Yet Indonesia has never processed silica to that grade, lacking both the purification technology and the industrial base to move beyond basic processing.
In July, Deputy Communications and Digital Minister Nezar Patria warned that Indonesia still contributed little to the artificial intelligence supply chain beyond hosting factories, despite sitting on vast reserves of critical minerals needed for semiconductors and AI hardware.
"We are nowhere in the global supply chain […] We have the manufacturing plants, but the higher-value components and materials are still imported,” Nezar said on July 14, recalling a visit to PT Infineon Technologies Batam, the local subsidiary of German semiconductor manufacturer Infineon Technologies.
He pointed out that the country still imported basic but high-value components, such as gold bonding wire used in chip packaging, illustrating how little of the semiconductor value chain the country could control and contribute to. - Jakarta Post/ANN
