China-Based Semiconductor Firms Tap Malaysian Companies for Chips Assembly

Chinese chipmakers reportedly turn to Malaysian companies for chip assembly deals as fears of U.S. sanctions intensify. A growing number of China-based chip design firms are reportedly tapping into companies in Malaysia to handle the assembling process of their high-end chips.

The chip firms are said to be taking this step to limit risks in case the United States widens its sanctions on China's semiconductor industry. The companies are asking chip packaging enterprises to assemble graphics processing units (GPUs) for them to complete their production processes.

Assembly Deal Requests

This information was shared by three individuals who are familiar with the discussions regarding the matter. As per Reuters, the deal requests only comprise assembly, a production process that does not breach any U.S. restrictions.

The Chinese firms are not requesting other jobs such as fabrication of the chip wafers. They reiterated that they only need chip assembly for GPUs. In a positive development, it was said that some companies have successfully secured contracts already. However, sources declined to identify the companies involved since the agreements are confidential.

The U.S. Restrictions

WION News reported that the increased restrictions by U.S. officials are limiting China's access to advanced GPUs, which are important components in artificial intelligence and military applications. The sanctions have left minor Chinese chip design firms fighting to obtain enough supply of advanced packaging services locally. This made the firms turn to Malaysian firms for these essential services.

Meanwhile, it was mentioned that Unisem, which is mainly owned by China-based Huatian Technology firm, and other chip packaging firms in Malaysia have received more business proposals and inquiries from Chinese customers. Despite possible concerns over the reactions, it was said that Unisem's business dealings are not affected because they are fully legitimate and compliant with the operation requirements.

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