Many of the largest semi and OEM companies are doing considerable development work in India to reduce development costs while working with regions where English is well spoken/understood. Having said that, there is still a nervousness about some IP being released in Asia, as people frequently jump from one company to another, with the fear that some of that IP leaves with them. With this in mind, more work in Asia is still biased towards back-end development (eg, layout, verification, test, etc) and “second generation” cost-reduction solutions, rather than core IP (eg, algorithms, architecture, “first generation” ASICs) development. In addition, I think semiconductor companies are addressing the turnover by investing in strong managers who better hold the teams together.
There is a big push within China (if you consider this to be part of S. Asia) to be self-sufficient from US semiconductor companies; this is being backed up by billions of dollars in investment by the Chinese government, and some large attempted M&A work by Chinese companies in acquiring US semi companies. A net result is an increasing number of chips that are being developed in China.
For discrete products (eg, MOSFETs, diodes, wide bandgap products, etc), packaging around the semiconductor is an area of intense innovation, arguably more than in the semiconductor “silicon” itself. Most of this packaging happens in South Asia, making this region extremely important.
Likewise, innovation around stackable wafers, HBM, TSV, etc is also closely tied to packaging and assembly, which is primarily in Asia.
Systems-on-chip requires considerable software. A lot of this work is done very effectively in Asia.
If you look at the broader Asia semi market, storage (DRAM and Flash) and imaging (CMOS imaging sensors) semiconductors are two huge markets where Asian semiconductor companies have a huge footprint through their innovation in this space
A final thought: as we approach the end of Moore’s Law, innovation will slow down and there is the potential for a greater focus on cost reduction rather than on innovation in some (not all) markets. This has the potential to open up greater opportunities for Asian semiconductor companies who (1) often can operate at lower margins and (2) will have less risk of introducing a product that will be quickly replaced by a new generation from incumbents. Examples of this can already be seen with wireless ASICs and consumer Ethernet ASICs.