More Taiwan-based IC design houses are moving to strengthen partnerships with foundries in China so as to land more orders from Chinese brand vendors seeking to cut reliance on US supplies of key semiconductor components, according to industry sources.

The sources said top executives of Taiwanese IC designers have recently paid intensive visits to not only foundry fabs operated in China by TSMC and UMC but also fabs run by China's Semiconductor Manufacturing International Corp (SMIC) and Hua Hong Semiconductor, aiming to increase their chipset production ratios in the country in line with the Chinese government's efforts to boost semiconductor self-sufficiency and reduce reliance on US suppliers.

Both TSMC and UMC have plans to expand their foundry capacities in China in 2020 while SMIC has also reported a sharp rise in capacity utilization for the fourth quarter of 2019 and expressed optimism about performance prospect for 2020 - all indicating China's campaign to de-Americanize its semiconductor supply chain is picking up momentum, the sources continued.

The campaign, intensified in the second half of 2019 following US trade sanctions against Huawei and other Chinese tech firms, should bring more advantages than disadvantages to Chinese clients, the sources commented, reasoning that Chinese brand vendors, by securing more supplies beyond the US, can exert more pressure on US suppliers to lower quotes while also toeing the national line.

Chinese cannot fully wean themselves off US suppliers in the short term, but Taiwanese IC designers, long engaged in direct competition with US peers, can immediately gain the most from orders transferred from Chinese clients, prompting them to forge close partnerships with Chinese foundry houses to benefit more.

By: DocMemory
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