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Taiwan-based IC substrate makers including Unimicron Technology, Nan Ya PCB and Kinsus Interconnect Technology are being discouraged from making further investments in China by the escalating US-China trade disputes.
The three makers have long maintained major production in Taiwan, with Unimicron and Nan Ya starting to set up only lower-level wire-bonding IC substrate production lines and some flip-chip substrate capacity in China in recent years at the request of their Chinese clients, according to industry sources.
This is despite the fact that they were repeatedly asked to build high-end substrate plants in China, where homegrown IC substrate supply chain remains immature in terms of technology and talent required, the sources continued.
But the US sanctions on Huawei has significantly deterred Taiwan's IC substrate makers from building new production facilities in China, as demand from other Chinese clients is not sufficient to support further capacity expansions there and China's semiconductor self-sufficiency goal has become harder to achieve following the US trade ban on its largest foundry house SMIC, the sources said.
In 2020, only Nan Ya has completed capacity expansion in China by clearing production bottlenecks at its Kunshan plant. Unimicron and Kinsus have all decided to put all their new investments in Taiwan, with the former building a new plant in Yangmei, northern Taiwan and the latter having purchased a plant site, also in Yangmei, from Chunghwa Picture Tubes (CPT) to house new capacities, the sources noted.
Chinese clients are expected to rely more on Taiwan's IC supply chain and US chipmakers can bolster Taiwanese suppliers' capacity expansions by placing big orders, which is giving them incentives to stay put in Taiwan, the sources said.