Geopolitical tensions have fueled market uncertainty in recent years, prompting semiconductor companies to rethink their supply chains. According to a report from Anue, European and American semiconductor leaders are increasingly adopting a “Made in China” approach to access the lucrative Chinese market.
China’s Electric Vehicle Boom Drives Semiconductor Interest
A major factor driving this shift is China’s dominance in the global new energy vehicle (NEV) market. The report highlights that as the world’s largest NEV market, China has become a crucial focus for major players like Infineon, STMicroelectronics, and NXP. With Western electric vehicle markets slowing down, these companies are ramping up investments in China to stay competitive.
Fabio Gualandris, president of manufacturing at STMicroelectronics, noted that avoiding Chinese manufacturing could mean missing out on the rapid advancements in the country’s electric vehicle sector. Establishing production and research operations within China allows companies to respond faster to local demand while reducing costs.
Shift Toward Localized Production
To meet Chinese customers’ growing need for localized components, companies like Infineon are transferring certain manufacturing processes to Chinese foundries. While Infineon has operated a production facility in Wuxi since 1996, its current focus is backend assembly and packaging. The report suggests that the company might soon outsource some frontend chip manufacturing to Chinese firms.
Strengthening Local Partnerships
Collaborations with Chinese semiconductor companies are also becoming a strategic focus. For instance, STMicroelectronics has partnered with Hua Hong Semiconductor to manufacture 40nm microcontroller units (MCUs) domestically, with production slated to start by late 2025. Additionally, STMicroelectronics has a joint venture with Sanan Optoelectronics to develop high-performance silicon carbide (SiC) devices, representing a $3.2 billion investment.
Similarly, NXP is expanding its footprint in China, including the potential transfer of frontend manufacturing to local facilities. With an existing packaging and testing center in Tianjin and its newly launched AIoT Innovation Center, NXP aims to establish a fully localized supply chain to better serve the Chinese market.
These strategic moves underscore the growing importance of China as a manufacturing and innovation hub for the global semiconductor industry.
