Chinese semiconductor companies shift focus to Malaysia

Malaysia is fast becoming a preferred destination for many Chinese semiconductor design companies, Reuters reported, with the companies specifically looking to Malaysian chip packaging companies to assemble graphics processing units (GPUs) to diversify their assembly operations and reduce risks.

Specifically, the requests focused only on assembly, excluding wafer fabrication. Some contracts have been finalized, although the names of the companies involved remain hidden due to confidentiality agreements.

Malaysia always wants to become a global chip manufacturing center

Concerns about growing US restrictions on high-end GPUs have prompted Chinese semiconductor design companies to look for overseas packaging options, due to concerns about China’s access to technology for artificial intelligence, supercomputing and military applications.

Malaysia plays a key role in the semiconductor supply chain, with its cost-effectiveness, skilled workforce, and advanced equipment. Unisem is now the country’s leading chip packaging company. Despite concerns about potential U.S. opposition, companies like Unisem maintain legality and compliance with business dealings.

China also aims to increase its share of the global semiconductor assembly, packaging and testing market, with several major chipmakers announcing expansion plans in the region. As political tensions between the US and China continue, countries like Vietnam and India are trying to attract companies to relocate chip production to their country.

Over the past half century, Malaysia has strategically positioned itself as a key player in the global semiconductor supply chain. The country currently meets about 13% of global packaging and testing needs and is aiming to increase that to 15% by 2030. In August, Germany’s Infineon said it would invest €5 billion ($5.4 billion) to expand its chip manufacturing plant in Malaysia.

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