Thailand to benefit from semiconductor production rejig, says US commerce secretary

By Devjyot Ghoshal

BANGKOK (Reuters) -Thailand stands to gain from a move by the United States to diversify semiconductor production, U.S. Commerce Secretary Gina Raimondo said on Wednesday, adding that American firms were ready to "supercharge" investments into the Southeast Asian country.

The electrical and electronics industry is one of Thailand's main foreign investment magnets, and a key sector that Thai Prime Minister Srettha Thavisin's government is looking to expand as it seeks to kickstart a sluggish economy.

"Production of semiconductors is dangerously concentrated in one or two countries in the world," Raimondo said at an event in Bangkok, outlining that the U.S. would look to push additional investments into countries that are part of the Indo-Pacific Economic Framework (IPEF) as it seeks to diversify production.

The U.S.-led IPEF, aimed in part at providing countries in the region with an alternative to closer ties with China, consists of 14 countries, including Thailand.

"So we're all in this together. It benefits everyone, the United States, Thailand, all the IPEF countries, to diversify the supply chain of semiconductor production," said Raimondo, who will hold talks with Thavisin on Thursday.

In 2022, the U.S. passed the landmark "Chips and Science" law that provides $52.7 billion for U.S. semiconductor production, research and workforce development.

Thailand's semiconductor industry, dominated by firms from the U.S, Japan, Korea and the Netherlands, is largely focused around the back-end process, putting the country at par with Vietnam and India, according to a 2023 Siam Commercial Bank report.

"The shifting dynamics of the global manufacturing supply chain, influenced by geopolitical conflicts, have attracted semiconductor production facility relocations to Thailand," the report said.

Thailand's Board of Investment is also offering incentives, such as tax breaks and duty exemptions, to draw investments into the semiconductor industry.

"As U.S. multinationals look to diversify their supply chains, Thailand is increasingly a place that comes to the top of the list," Raimondo said

Raimondo visited the Philippines earlier this week, where she said U.S. companies were set to announce investments amounting to more than $1 billion in the country, a staunch U.S. ally. The investments will span areas like solar energy, electric vehicles and digitisation, she said.

(Reporting by Devjyot Ghoshal; Writing by Martin Petty; Editing by Kanupriya Kapoor and Raju Gopalakrishnan)