Chinese Semiconductor Firms Turn to Malaysia Amidst US Sanctions

Malaysian packaging firm sees a surge in orders from China
A flood of inquiries for AI semiconductor GPU assembly
Holds a 13% share in the global packaging market

Chinese companies are knocking on Malaysia’s door in response to U.S. semiconductor export sanctions, drawing attention.

Reuters reported on the 17th (local time) that as the U.S. is expected to expand sanctions on Chinese semiconductors, an increasing number of Chinese semiconductor designers are requesting the assembly of Artificial Intelligence (AI) semiconductors, specifically Graphic Processing Units (GPUs), from Malaysian semiconductor packaging companies, citing three sources.

In October, the U.S. Department of Commerce announced plans to tighten controls on semiconductor exports to China. This is a tightening of regulations proposed a year ago, and further measures cannot be ruled out. China is exploring various countermeasures, including expanding contact with Malaysia.

Semiconductor packaging firms in Malaysia, including Unisem, a significant shareholder in China’s Huatian Technology, note a substantial increase in business inquiries from Chinese customers.

Malaysian Semiconductor Packaging Firms Benefit

John Chia, Chairman/Group Managing Director of Unisem, declined to comment on customers but explained that “due to trade sanctions and supply chain issues, many Chinese chip design houses have come to Malaysia to establish additional sources of supply outside of China to support their business in and out of China.”

Regarding whether receiving GPU assembly orders from Chinese companies could provoke U.S. anger, Chia said, “It’s fully legitimate and compliant,” adding that the company doesn’t have time to worry about “too many possibilities” right now.

Other large chip packaging companies in Malaysia include Malaysia Pacific Industries and Inari Amertron. They declined to respond to Reuters‘ inquiries.

Semiconductor packaging technology has recently emerged as a critical competitive advantage that can dramatically improve the performance of AI semiconductors. This has increased Chinese companies’ interest in the Malaysian packaging industry.

China chose Malaysia among several countries due to its friendly relations, cost-effectiveness, skilled workforce, and sophisticated equipment. Malaysia currently holds 13% of the global semiconductor packaging, assembly, and testing market and aims to increase this to 15% by 2030.

By. Jin Young Lee