Jakarta. The United States is looking to take part in developing Indonesia’s semiconductor ecosystem following a tariff deal meant to balance bilateral trade, according to senior minister Airlangga Hartarto.

Indonesia and the US not long ago reached a deal that saw Washington slashing its reciprocal tariffs from 32 percent to 19 percent, which officially kicked in on Aug. 7. The tariff cuts did not only give Indonesia some relief as they were the same as several other ASEAN counterparts, but had also brought good news for Jakarta’s dream for a homegrown semiconductor production, Airlangga told a presser on Friday evening.

“Now that we have clinched the deal, the US is interested in promoting the semiconductor [industry] in Indonesia. We [Indonesia] are currently working on the ecosystem,” Airlangga said in Jakarta.

The details of Washington backing the Indonesian semiconductor dream remain scarce. This includes whether the partnership is limited to human capital development or if there are plans for an American investor to set up a manufacturing plant.

But shortly before heading home, Airlangga told reporters that Indonesia had prepared some special economic zones (SEZs) across the country for semiconductor development. Any investor who puts their money in SEZs gains an array of incentives, including tax holiday and duty-free treatment. The minister revealed that the tariff deal could possibly revive some talks to the International Technology Security and Innovation (ITSI) Fund, created by the CHIPS Act of 2022.

“We have had talks about the ITSI Fund, but discussions [on this fund] stalled after [US President] Donald Trump returned to power. Now that we have reached a tariff deal, they [the US] want to pick up the discussion,” Airlangga said.

Indonesia comes with natural advantages of substantial reserves of minerals key in semiconductor production.

The US first unveiled its intentions of possibly backing Indonesian human capital development via the ITSI Fund last November. Trump’s predecessor Joe Biden was hosting President Prabowo Subianto who had jetted off to the US for a state visit.

The ITSI Fund provides the government $500 million ($100 million annually over five years, starting in 2023) to facilitate collaboration with US partners on enhancing the global semiconductor supply chain security. The US is also open to having collaborations involving American universities for this human capital development.

When Indonesia reached the deal in mid-July, US President Donald Trump couldn’t contain his excitement about Indonesian copper. This red metal is a mainstay ingredient in the production of advanced semiconductor chips.

According to a White House joint statement, Indonesia agreed to lift its export restrictions on critical minerals in exchange for the lower-than-promised 19 percent tariff. Airlangga had clarified that this did not mean Jakarta would lift its export ban on unprocessed ores. However, Indonesia would stick to its stance of only exporting processed minerals to spur its economy.

Investment Minister Rosan Roeslani also recently revealed that the US had agreed to drop the tariffs on Indonesian copper down to 0 percent.

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