IPC makers adjusting operations in response to supply chain localization in China
Ninelu Tu, Taipei; Willis Ke, DIGITIMES

China has instructed system integrators associated with defense, networking, finance and transportation sectors to adopt homegrown chips as much as possible, prompting Taiwan-based IPC makers to adjust their operations, according to industry sources.

The sources said that the segments usually rely on system integrators to carry out open procurement tenders for computer systems. This will pose no direct impact on Taiwan IPC makers, but they have to adjust their operations to vie for government procurement orders from China.

As defense, networking and finance industries involve higher entry barriers, Taiwanese IPC makers can more easily tap into the transportation sector by cooperating with Chinese chipmakers to work out related modules, faciliating validations at system integrators in China.

The sources indicated that Advantech and some peers with higher revenue ratios for the China market are collaborating with supply chain players there to develop new products for applications to the four segments.

The Chinese government will intensify its efforts on promoting local content to cut reliance on foreign supplies and raise self-sufficiency of key components. Besides chip solutions, production of many other components such as power supplies and connectors will gradually be localized in China, the sources noted.

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