Chinese Turns To Malaysia For Assembly Of High-End Chips
More Chinese semiconductor design companies are considering partnerships with Malaysian firms to assemble high-end chips, particularly GPUs, to mitigate US sanctions on China’s chip industry.
According to reports, Chinese semiconductor design companies use Malaysian manufacturers to assemble high-end chips to hedge against U.S. sanctions on China’s chip industry. Three people familiar with the conversations say the businesses want Malaysian chip packaging manufacturers to construct GPUs.
Look at the report that the user shares:
A growing number of 🇨🇳 semiconductor design companies are tapping Malaysian chip packaging firms to assemble a portion of their high-end chips such as GPUs.
The requests only encompass assembly — which does not contravene any US restrictions — and not fabrication of the chip… pic.twitter.com/OxLs8NFbTD
— Byron Wan (@Byron_Wan) December 18, 2023
They argued the requests only cover assembly, which is legal in the U.S., not semiconductor wafer production. 2 persons said some contracts have been agreed. Due to confidentiality agreements, the people will not name the companies. Washington has increasingly restricted GPU sales and chip-making equipment to limit China’s access to high-end GPUs that may power artificial intelligence breakthroughs, supercomputers, and military applications. Analysts say smaller Chinese semiconductor design firms need help with advanced packaging services at home as sanctions bite and AI expansion increases demand.
Two sources stated that Chinese corporations want sophisticated semiconductor packaging. Advanced chip packing is essential in the semiconductor industry because it boosts performance. This sometimes involves making chipsets with closely packed chips to form a powerful brain.
The two people said that while not subject to U.S. export restrictions, it requires sophisticated technology that the corporations worry may be targeted for China export bans.
Another user shares:
Malaysia is one of those little super Asian countries.
With a population of just 35 million, it accounts for 13% of world’s semiconductor packaging industry, a pivotal sector in chip supply chain.
Now, China is investing a lot in Malaysia as well.
— S.L. Kanthan (@Kanthan2030) December 18, 2023
Malaysia, a semiconductor supply chain hub, is well-positioned to gain business as Chinese chip makers diversify beyond China for assembling. One source briefed on the situation claimed Chinese clients are doing more business with Unisem, primarily owned by Huatian Technology and other Malaysian chip packaging companies. Two people added that Malaysia is economical, on excellent terms with China, and has an experienced workforce and sophisticated equipment. Chinese chip design firms also consider it. Chia said Unisem’s business transactions were “fully legitimate and compliant,” and the company did not have time to worry about “too many possibilities” when asked if accepting Chinese GPU orders could anger the U.S. He said most Unisem customers in Malaysia were Americans. The US Department of Commerce declined to comment.
The Major Hub Regarding The Firm
Malaysia presently holds 13% of the worldwide semiconductor packaging, assembly, and testing market and aims to reach 15% by 2030. In September, former Huawei business Xfusion announced it would work with NationGate to produce GPU servers for AI and high-performance computing data centers. Shanghai-based StarFive is developing a design center in Penang, and AMD-partnered chip packaging and testing business TongFu Microelectronics said last year that it would expand its Malaysia plant.
Malaysia attracts multi-billion dollar semiconductor investments with incentives. In August, Infineon announced a 5 billion euro ($5.4 billion) power chip facility expansion in Germany. Intel unveiled a $7 billion advanced chip packaging factory in Malaysia in 2021.
Chinese firms are more than just picking Malaysia. JCET Group, the world’s third-largest chip assembly and testing company, bought a Singapore advanced testing facility in 2021. Countries like Vietnam and India are also expanding into chip production to attract clients trying to reduce U.S.-Sino geopolitical risks.
