ASML suppliers reportedly eyeing investments in Southeast Asia to reduce exposure to China

Amid a chip war between the US and China, ASML's multiple suppliers reportedly will visit major semiconductor-producing countries in Southeast Asia, looking to diversify away from China.

Reuters reported that according to documents from the Brabant Development Agency and other sources, a dozen of ASML's suppliers, including Neways, AAE BV, BKB Precision, HQ Group, KMWE Group, Sempro, Sioux Technologies, and VDL ETG, would visit Vietnam, Malaysia, and Singapore this week, potentially for building plants in Vietnam and Malaysia and making Singapore as their regional headquarters.

Brabant Development Agency is a Dutch-based public organization for bridging entrepreneurs, research institutes, and the Netherlands government.

Two unnamed sources told Reuters that these suppliers are trying to reduce their exposure to China even though a VDL Groep statement says it has no plan to leave China at all. Meanwhile, Reuters reported that one of the suppliers is in advanced talks to build a factory in Vietnam.

Besides China, Taiwan, Japan, and South Korea, Southeast Asia is also a primary semiconductor production base, especially for the OSAT and ATMP businesses. Taiwan-based ASE, the world's largest provider of semiconductor assembling and test manufacturing services, has set up manufacturing facilities in Penang, Malaysia. Intel's new packaging and test facilities in Penang are expected to begin operation in 2024, New Straits Times reports.

Intel, which has established a chip packing plant in Vietnam, is considering expanding its chip investments in Vietnam, Reuters reported in February. According to Vietnam Briefing, Samsung is testing BGA (ball grid array) products and plans to mass-produce the products by July 2023.

Nikkei Asia, in a February report, quoted five unnamed sources saying that the US-based chip equipment suppliers, such as Applied Materials, Lam Research, and KLA, had been relocating their non-Chinese staff from China to Singapore and Malaysia or increasing production capacity in Southeast Asia.

As the US government has been expanding its restrictions to prevent China from obtaining advanced chipmaking tools and urging the Netherlands and Japan to join its containment of China, chipmaking tool suppliers will find it difficult to maintain operations in China. According to data from SEMI, China was the biggest buyer of chipmaking tools in 2020 and 2021 before the US imposed a strict export ban on China in 2022.

Some cells are blank as data has yet to be reported to the United Nations. Source: UN Comtrade, compiled by DIGITIMES Asia