© Reuters. FILE PHOTO: A employee inspects semiconductor chips on the chip packaging agency Unisem (M) Berhad plant in Ipoh, Malaysia October 15, 2021. REUTERS/Lim Huey Teng/File Photograph
By Fanny Potkin and Yantoultra Ngui
SINGAPORE (Reuters) – A rising variety of Chinese language semiconductor design corporations are tapping Malaysian companies to assemble a portion of their high-end chips, eager to hedge dangers in case the U.S. expands sanctions on China’s chip trade, sources stated.
The businesses are asking Malaysian chip packaging companies to assemble a kind of chip often known as graphics processing models (GPUs), in keeping with three folks with data of the discussions.
The requests solely embody meeting – which doesn’t contravene any U.S. restrictions – and never fabrication of the chip wafers, they stated. Some contracts have already been agreed, two of the folks added.
The folks declined to reveal the names of the businesses concerned or to be recognized, citing confidentiality agreements.
Looking for to restrict China’s entry to high-end GPUs that would gas synthetic intelligence breakthroughs or energy supercomputers and army purposes, Washington has more and more positioned restrictions on their gross sales in addition to on subtle chip-making gear.
As these sanctions chew and an AI increase fuels demand, smaller Chinese language semiconductor design companies are struggling to safe ample superior packaging providers at house, analysts have stated.
A few of the Chinese language corporations are involved in superior chip packaging providers, two folks stated.
Superior packaging of chips can considerably enhance chip efficiency and is rising as a essential know-how within the semiconductor trade. This generally entails the development of chiplets the place chips are packaged tightly to work collectively as one highly effective mind.
Though not topic to U.S. export restrictions, it is an space that may require subtle know-how which the companies fear would possibly at some point be focused for curbs on exports to China, the 2 folks added.
Malaysia, a serious hub within the semiconductor provide chain, is seen as properly positioned to seize additional enterprise as Chinese language chip companies diversify exterior of China for assembling wants.
Unisem, majority owned by China’s Huatian Know-how, and different Malaysian chip packaging corporations have seen elevated enterprise and inquiries from Chinese language shoppers, stated one supply who was briefed on the matter.
Unisem Chairman John Chia declined to touch upon the corporate’s shoppers however stated: “As a result of commerce sanctions and provide chain points, many Chinese language chip design homes have come to Malaysia to determine extra sources of provide exterior of China to help their enterprise out and in of China.”
Chinese language chip design companies additionally see Malaysia as an excellent possibility as a result of the nation is perceived as being on good phrases with China, is reasonably priced, with an skilled workforce and complicated gear, two of the sources stated.
Requested whether or not accepting orders to assemble GPUs from Chinese language companies might doubtlessly provoke U.S. ire, Chia stated Unisem’s enterprise dealings have been “totally professional and compliant” and the corporate didn’t have the time to fret over “too many potentialities”.
He famous that the majority of Unisem’s prospects in Malaysia have been from the USA.
The U.S. Division of Commerce didn’t reply to requests for remark.
Different massive chip packaging companies within the nation embrace Malaysian Pacific Industries and Inari Amertron. They didn’t reply to Reuters requests for remark.
Chinese language corporations are additionally involved in having their chips assembled exterior China as that would additionally make it simpler to promote their merchandise in non-Chinese language markets, stated one supply, an investor in two Chinese language chip startups.
A MAJOR HUB
Malaysia at present accounts for 13% of the worldwide marketplace for semiconductor packaging, meeting, and testing and is aiming to spice up that to fifteen% by 2030.
Chinese language chip companies which have introduced plans to develop in Malaysia embrace Xfusion, a former Huawei unit, which stated in September it could companion with Malaysia’s NationGate to fabricate GPU servers – servers designed for information centres and that are utilized in AI and high-performance computing.
Shanghai-based StarFive can be constructing a design centre in Penang, and chip packaging and testing agency TongFu Microelectronics stated final 12 months it could develop its Malaysia facility – a enterprise with U.S. chipmaker AMD (NASDAQ:).
Providing an array of incentives, Malaysia has attracted multi-billion greenback chip investments. Germany’s Infineon (OTC:) stated in August it could make investments 5 billion euros ($5.4 billion) to develop its energy chip plant there.
U.S. chipmaker Intel (NASDAQ:) introduced in 2021 that it could construct a $7 billion superior chip packaging plant in Malaysia.
Chinese language corporations usually are not simply selecting Malaysia. In 2021, JCET Group, the world’s third-largest chip meeting and testing firm, accomplished an acquisition of a sophisticated testing facility in Singapore.
Different international locations reminiscent of Vietnam and India are additionally searching for to develop additional into chip manufacturing providers, hoping to lure shoppers eager to minimise U.S.-Sino geopolitical dangers.
($1 = 0.9272 euros)