In early 2026, the government confirmed that semiconductors are no longer treated as a long-term aspiration but as a strategic industry tied to digital competitiveness, industrial resilience, and supply-chain security. 

In January 2026, Coordinating Minister for Economic Affairs Airlangga Hartarto said the government had prepared initial funding of USD 120-250 million (approx. IDR 4.2 trillion) to develop Indonesia’s semiconductor ecosystem, with potential total investment commitments reaching USD 1 billion. Speaking at the IBC Business Outlook 2026 in Jakarta, Airlangga described semiconductors as a critical gap in Indonesia’s electronics value chain, particularly amid global tariff disputes and supply disruptions.  

“Semiconductors are one of the most needed components, and Indonesia is still ‘leaking’ in this area,” he said, adding that rebuilding domestic capability had become a priority. 

A day earlier, Airlangga disclosed a separate collaboration with UK-based Arm Holdings, stating that the government had earmarked USD 125 million to work with Arm on developing Indonesia’s semiconductor ecosystem, characterizing the effort as a “catching up game” given Indonesia’s late start compared to regional peers. 

These announcements build on groundwork laid throughout 2025. The Indonesian government has formed a dedicated task force for semiconductor and artificial intelligence development, covering chip design, human resource training, data-center construction, and assembly, testing, and packaging facilities. Indonesia already operates an AI data center in the Nongsa Special Economic Zone (KEK) in Batam, which is being positioned as one of the core industrial drivers for the digital economy. 

While much of the public discussion around semiconductors focuses on fabs and chips, the technologies that enable those ambitions extend well beyond silicon. Optics and photonics sit at the core of how semiconductors are designed, manufactured, tested, and deployed, making them a critical, and often earlier-entry, segment of the value chain. 

Where Photonics Fits in the Semiconductor Equation 

Optics and photonics cover technologies that generate, manipulate, and detect light, including lasers, optical sensors, imaging systems, and optoelectronic devices. In the semiconductor industry, these technologies are foundational rather than peripheral. 

Laser-based systems are widely used in electronics manufacturing for micromachining, cutting, drilling, marking, trimming, and surface structuring, particularly where mechanical tools lack the required precision. Optical metrology and inspection systems are equally central. Semiconductor production relies on optical measurement to detect defects, measure critical dimensions, and ensure alignment as components shrink and packaging becomes more complex. 

Photonics also underpins how chips function once deployed. Silicon photonics and photonic integrated circuits enable high-speed optical data transfer inside data centers and telecom networks, supporting bandwidth-intensive workloads such as cloud computing and artificial intelligence. As data-center capacity expands, demand for photonics-enabled components rises alongside demand for conventional chips. 

Indonesia’s industrial trajectory aligns with this logic. US-based logistics company DHL published a December 2025 assessment of Indonesia’s semiconductor industry that noted growing demand for optoelectronic components, including LEDs and optical sensors, driven by smart-city projects, energy-efficient infrastructure, and automation. The same report ranked Indonesia 26th globally for semiconductor device exports and described the country as strengthening its position through government initiatives, international partnerships, and expanded production facilities. 

Concrete examples of photonics-based technologies entering Indonesia are already visible outside manufacturing. In November 2025, a Jakarta hospital introduced Asia’s first photon-counting CT scanner, Siemens Healthineers’ NAEOTOM Alpha Pro, which uses advanced photonic detection to deliver higher image resolution with lower radiation doses. While medical imaging sits outside semiconductor production, it reflects the same ecosystem: high-performance sensors, precision electronics, and advanced data processing, all reliant on photonics. 

Building Capability: Research, Zones, and Industrial Platforms

Beyond policy statements, Indonesia has begun anchoring semiconductor and photonics development in specific locations and institutions. In December 2025, a consortium involving Indonesian, US, and German companies announced plans to develop semiconductor, silica-sand, and advanced glass manufacturing facilities on Galang Island in Batam, with a total investment value of approximately USD 26.7 billion. The project, located within a National Strategic Project industrial park, spans silicon wafer production, semiconductor manufacturing, and downstream processing of silica and quartz, materials closely linked to photonics and optoelectronics. 

Research capacity is also being formalised. Indonesia’s National Research and Innovation Agency (BRIN) operates a dedicated Photonics Research Center under its Organisation for Nanotechnology and Materials. The center is mandated to develop laser, photonics, and optoelectronics research, with outputs aimed at patents, prototypes, and industrial application. Leadership appointments and research programs indicate that photonics is being positioned as a national capability rather than a purely academic discipline. 

Bandung is emerging as another focal point. Government plans to establish a semiconductor-oriented special economic zone linked to Institut Teknologi Bandung (ITB) place chip design, nanofabrication, and optoelectronic integration at the center of the city’s technology agenda. This cluster approach mirrors regional models, where research institutions, pilot facilities, and suppliers co-locate to accelerate capability building. 

Outlook for Optics and Photonics Companies 

Indonesia’s semiconductor push may be best understood as a staged build, prioritizing ecosystem formation before full-scale advanced fabrication. In that sequence, optics and photonics companies often enter earlier than front-end chip manufacturers, supplying the tools, systems, and expertise needed for measurement, inspection, laser processing, sensors, and optoelectronic integration. 

Government funding commitments, named international partners such as Arm, operational infrastructure like the Nongsa AI data center, and large-scale material and manufacturing projects in Batam point to a market that is moving from intent to implementation. For optics and photonics firms, Indonesia’s semiconductor agenda is creating demand not only for components, but for collaboration, technology transfer, and long-term industrial partnerships. 

As Indonesia works to close gaps in its electronics and semiconductor supply chain, photonics is emerging as one of the technologies that can translate ambition into capability, positioning optics and photonics companies as enablers of the country’s next industrial phase.