When Powerchip Technology Corp (力晶科技) entered a deal with the eastern Chinese city of Hefei in 2015 to set up a new chip foundry, it hoped the move would help provide better access to the promising Chinese market.
However, nine years later, that Chinese foundry, Nexchip Semiconductor Corp (合晶集成), has become one of its biggest rivals in the legacy chip space, leveraging steep discounts after Beijing’s localization call forced Powerchip to give up the once-lucrative business making integrated circuits for Chinese flat panels.
Nexchip is among Chinese foundries quickly winning market share in the crucial US$56.3 billion industry of so-called legacy or mature node chips made on 28-nanometer process technology and larger, a trend that prompted former US president Joe Biden’s administration to initiate an investigation and is alarming Taiwanese industry.
Photo: Ann Wang, Reuters
These Chinese foundries, which include Hua Hong Semiconductor Ltd (華虹半導體) and Semiconductor Manufacturing International Corp (SMIC, 中芯國際), are threatening the long-held dominance of Powerchip, United Microelectronics Corp (UMC, 聯電) and Vanguard International Semiconductor Corp (世界先進) in the market for chips used in cars and display panels by slashing prices and embarking on aggressive capacity expansion plans.
Taiwanese foundries are then forced to retreat or pursue more advanced and specialty processes, executives in Taiwan said.
“Mature-node foundries like us must transform; otherwise, Chinese price cuts will mess us up even further,” said Frank Huang (黃崇仁), chairman of Powerchip Investment Holding Corp (力晶創新投資控股) and its listed unit Powerchip Manufacturing Semiconductor Corp (力積電), which the company was reorganized into in 2019.
UMC said that the expansion of capacity globally had created “severe challenges” for the industry and that it was working with Intel to develop more advanced, smaller chips and diversify beyond legacy chipmaking.
US-China trade tensions might ease the pain a bit, executives in Taiwan said, as companies hoping to secure supply chains seek chips made outside China. However, US President Donald Trump has said he plans to impose tariffs as high as 100 percent on semiconductors made outside the US.
Blocked by the US in recent years from pursuing high-end chip technology, Chinese foundries doubled down on legacy chips and have undercut Taiwanese rivals on price, because of strong funding support from Beijing and their embrace of lower margins, executives in Taiwan said.
Chinese companies have dramatically increased legacy chip production capacity in the past few years.
China’s share of global mature node manufacturing capacity was 34 percent last year, while Taiwan’s was 43 percent, Taipei-based TrendForce Corp (集邦科技) said.
By 2027, China’s share is projected to surpass Taiwan’s, while South Korea and the US, with single-digit shares, are expected to decline.
Consultancy SEMI forecasts that out of 97 new fabrication plants starting production from 2023 to this year, 57 are in China.
Although Taiwanese foundries can still compete on factors such as process stability and better production yields, one executive working at a Taiwanese chip designer said Chinese foundries had since 2023 become more aggressive in pitching business.
That person, and a second one working at another Taiwanese chip designer, said Chinese customers — especially in consumer-focused sectors such as panels — were increasingly asking Taiwanese chip designers to hire Chinese fabs to make the chips, in line with a call from Beijing for Chinese companies to localize supply chains.
Some respite could come from efforts by Washington to curb China’s chip industry growth, alongside worsening relations between Beijing and other countries that force customers to split supply chains into China-for-China and non-China networks.
Huang said they were already seeing some orders that would have gone to China being directed to their sites in Taiwan and expect that to accelerate. An executive from a chip design company in Taiwan also said they had been receiving more orders from international customers asking to make chips outside China since 2023.
“Some customers will tell us that no matter what, they don’t want us to tape out chips in China; they don’t want ‘Made in China,’” the executive said.
Cairo’s new monorail slices across the city skyline, running above the familiar chaos of blaring horns and aging buses’ exhaust fumes that mark rush hour below. The US$4.5 billion monorail, opened this month, is among Egypt’s most prominent new transport projects, part of a debt-funded infrastructure drive criticized for sapping state finances while bringing limited benefits to most of the country’s 109 million people. “It feels like you’re in a different country,” said Ramy Sayed, a restaurant manager, aboard a driverless Innovia 300 train. “No noise, no traffic, we’re not used to this.” The eastern line runs 56km from the bustling middle-class
Taiwanese firms have increased investment in the Philippines in recent years as Manila’s ties with Washington deepen and global supply chains continue to shift away from China, an expert at the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The Philippines had not been among Taiwanese investors’ top choices in Southeast Asia, CIER Taiwan ASEAN Studies Center director Kristy Hsu (徐遵慈) said at a seminar in Taipei. However, Taiwan’s investment in the country has grown significantly since the COVID-19 pandemic, reaching US $257 million last year, a high in recent years, she said. Although Taiwan’s total investment in the Philippines still lags
Intel Corp regards Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) as a longstanding partner, as the US chipmaker would continue outsourcing production of advanced chips to TSMC, Intel chief executive officer Lip-Bu Tan (陳立武) said yesterday. “I don’t look at people as competitors. I look at the collaboration... Nvidia is also, you know, a good friend,” Tan told a news conference following his keynote speech at the Computex trade show in Taipei. “It’s a very trusted partnership for us... We are a big, top customer for them, and we’re going to continue doing that,” he said, referring to TSMC, the world’s largest foundry
Artificial intelligence (AI) agents would supplant smartphones as the center of people’s digital lives, fundamentally reshaping personal devices and driving a major computing upgrade cycle, Qualcomm Inc CEO Cristiano Amon said yesterday. In his keynote speech for this year’s Computex trade show in Taipei, Amon said that the rise of "agentic AI" — AI systems capable of reasoning, planning and carrying out tasks autonomously — would transform how people interact with technology across phones, PCs, vehicles and wearable devices. Describing the technology as the next major evolution in computing, Amon said that "2026 is the year of agents.” For decades, smartphones have sat
RSS