The new upheaval has corporations considering relocating some of their chipmaking capacity to neighbouring Vietnam and India due to U.S. restrictions on chip exports to China. However, experts told CNBC that it is unlikely that the global competition for chipmaking dominance will be disturbed by the Biden administration’s limits on China’s semiconductor exports.
Recent inquiries from clients and prospects to KPMG regarding enhancing chipmaking capabilities throughout Southeast Asia jumped 30% to 40% from those received prior to the epidemic.
The U.S. started requiring businesses to seek licences in October before exporting advanced semiconductors or associated manufacturing machinery to China. Additionally, if those companies want to employ American machinery to produce particular high-end chips for export to China, Washington must give its consent.
Workarounds sought by semiconductor firms found that the leading Taiwanese chipmaker TSMC and its South Korean rivals Samsung and SK Hynix were granted one-year exemptions to keep delivering American chipmaking machinery to their facilities in China.
The sophisticated semiconductor fabrication factories, or fabs, in China, cannot receive some services from Dutch semiconductor toolmaker ASML’s employees working in the United States, ASML said. The curbs are just the most recent in a string of changes that have affected the $600 billion global semiconductor market.
Chipmakers who were originally drawn to China’s ability to produce chips at a low cost have recently had to contend with increased labour costs there, supply chain interruptions brought on by Covid-19 limitations, and an increase in geopolitical risk. Now, these chipmakers with a concentration on China are finding the renewed motivation to replicate similar production lines overseas.
For international semiconductor manufacturers, Vietnam has become a viable alternative to China as a production hub. Major chipmakers have flocked to the nation as a result of billions of dollars’ worth of expenditures in research and educational facilities.
