Chinese Firms Seek Malaysian Chip Assembly Amid US Restrictions

Chinese companies are reaching out to Malaysian chip packaging firms to assemble graphics processing units (GPUs), as established by three insiders aware of the conversations. They specialize only in assembling, not constructing the chip wafers, as per the sources who wished to remain anonymous. Some contracts have already been confirmed.

Summary

  • Chinese companies are seeking assistance from Malaysian chip packaging firms for assembling GPUs.
  • This does not infringe on any U.S. restrictions as it only involves the assembly, not fabrication, of chip wafers.
  • Increasing U.S. sanctions and an AI boom are presenting difficulties for smaller Chinese semiconductor companies to secure advanced packaging services.
  • Malaysia’s strong position in the semiconductor supply chain makes it an attractive destination for Chinese chip firms.
  • Unisem and other Malaysian chip packaging companies have seen a rise in business from Chinese clients.
  • Malaysia is appealing to Chinese firms due to its good standing with China, affordable costs, experienced workforce and sophisticated equipment.

Being a significant player in the semiconductor supply chain, Malaysia stands a good chance of drawing in business as Chinese chip firms seek assembling needs beyond China.

Unisem’s Chairman, John Chia, has left the company’s client information undisclosed. However, he did mention that due to trade sanctions and supply chain problems, many Chinese chip designing companies are looking beyond China for their supplies.

Chinese chip design firms view Malaysia as the ideal location because of its good relationship with China, affordable cost, experienced workforce and advanced equipment.

The US Viewpoint

On whether accepting orders for GPU assembly from Chinese firms might provoke U.S. disapproval, Chia says that the company is not concerned. any possibilities. He pointed out that most of Unisem’s customers in Malaysia are from the United States.

The U.S. Department of Commerce declined to comment on the matter.

Malaysia currently holds a 13% share in the global market for semiconductor packaging, assembly, and testing – a figure they hope to increase to 15% by 2030.

Expanding Chip Firms

Chinese chip firms like Xfusion, a former Huawei unit, and Shanghai-based StarFive have plans for expansion in Malaysia. German chipmaker Infineon and US-based Intel have also announced massive investments in Malaysia.

Endeavors are not limited to Malaysia. In 2021, JCET group, the third-largest chip assembly and testing company, acquired an advanced testing facility in Singapore. Other countries such as Vietnam and India are also working towards expanding their chip manufacturing services.

These developments in the semiconductor industry could potentially impact the forex trading market, especially currencies of the countries involved in the chip-manufacturing industry. With China diversifying its chip production outside its borders, assets related to the Chinese technology sector could experience fluctuations.

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