Thursday, March 23, 2023
U.S. smartphone chip designer Qualcomm is accelerating the movement of its supply out of China in favor of Taiwan, with plans to boost its purchases in the island country to NT$300 million (US$9.83 million) in 2024.
In response to the increased geopolitical risks incurred by the U.S.-China chip war, mobile phone chip manufacturer Qualcomm has accelerated the transfer of chip production supply chains out of China. Orders that had previously been entrusted to Chinese wafer foundries or packaging and testing factories are steadily being transferred to firms in Taiwan.
Mass production of chips for Qualcomm in Taiwan will start after certifications are completed in the second quarter, and Taiwanese suppliers such as Taiwan Semiconductor Manufacturing Corp. (TSMC), United Microelectronics Corp. (UMC), Chunghwa Precision Test (CHPT), Advanced Semiconductor Engineering, Inc. (ASE Group), Sporton International Inc., and Unimicron will benefit directly, reported Commercial Times.
Qualcomm held an opening ceremony for a manufacturing engineering and testing center in Hsinchu on Friday (March 17), demonstrating that Taiwan is a top player in advanced manufacturing processes and semiconductor testing. Qualcomm has plans to accelerate its sourcing in Taiwan to NT$300 billion in 2024.
According to industry analysts, the demand for smartphones is weak, but Qualcomm has expanded its production scale in Taiwan. In addition to Qualcomm's success in non-consumer fields such as automotive electronics and industrial automation in recent years, the key reason for moving to Taiwan is that the US-China chip war has prompted Qualcomm to shift production away from China amid heightened geopolitical risks.
Based on information released by Qualcomm, its front-end wafer manufacturing partners in Taiwan include TSMC and UMC. The wafer test interface supplier is CHPT, and the back-end packaging and testing manufacturing partners include ASE Group, Siliconware Precision Industries Co. (SPIL), Unimicron, and Sporton. Partners in ultrasonic fingerprint recognition include ASE Holdings, Mirle Automation Corp, General Interface, and Nano Electronics and Micro System Technologies, Inc.
The U.S. Department of Commerce released the latest semiconductor restrictions on China in October last year, extending the restrictions on logic integrated circuits to the memory category. In addition to Chinese-funded enterprises, foreign-funded production bases located in China now also need to apply for licenses on a case-by-case basis in order to continue to obtain manufacturing-related equipment.
This year, the U.S. teamed up with the Netherlands and Japan to expand the restrictions on the sale of semiconductor manufacturing equipment to China.
Under such circumstances, various OEM factories have begun to request the relocation of chip production. End products in the Chinese market can continue to use Chinese-made chips, but non-Chinese markets require the reduction or discontinuation of Chinese-made chips.
As far as Qualcomm is concerned, as long as the end market for chips produced by Chinese wafer foundries and packaging and testing factories is outside China, the production supply chain will be transferred to Taiwan and South Korea, and Taiwan will be the most important recipient of these transfer orders, stated the Commercial Times.
According to industry insiders, Qualcomm began to adjust the supply chain in response to geopolitical risks in the third quarter of last year and began to divert production away from China in the fourth quarter. Judging from current progress, it is anticipated that orders will be transferred to Taiwan's semiconductor production chain and mass production will begin in the second quarter of this year.
Furthermore, Qualcomm's 4nm and 3nm wafer foundry orders are also concentrated in Taiwan, and TSMC is already the recipient of large orders.
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