Many OSATs and IDMs have backend production capacities in Penang, Malaysia, which has become an important location for their site expansions.
ASE group CEO Tien Wu has disclosed that the company's capacity expansions will give priority to Malaysia, Japan, and Korea, and some customers are specifically asking that it expand capacity in Malaysia.
Penang is already a semiconductor hub where many OSATs and IDMs run in-house backend packaging capacity, and ASE also has capacity in the Malaysian state, according to industry sources.
AMD reportedly has also asked its OSAT partner, the China-based Tongfu Microelectronics, to expand capacity in Penang, the sources said, adding that ASE and its affiliate, SPIL, are both in AMD's supply chain.
The ASE group in November 2022 announced a US$300 million project to build a new plant in Penang, which is scheduled to complete in 2025, creating 2,700 jobs for locals. The plant will mainly cater for the 5G, AI, HPC and automotive electronics segments.
Tien noted that reactions to geopolitical pressure on the development of the semiconductor industry vary from company to company, and from country to country. US IC design houses are still expanding their outsourcing and they are keen on placing orders with foundry houses. Big companies' CEOs, including those from the top-2 GPU vendors, are frequently flying to Asia on business trips.
Major US-based IDMs are also expanding both frontend and backend capacity. While they are also scrambling to secure frontend capacity supply from outside sources, they are unlikely to outsource the backend processes, as they all have strong in-house packaging capability, the sources said.
US customers are asking their OSAT partners to ready some capacity that can be flexibly adjusted to meet their demands, the sources said, adding that the customers want to make sure that they will have basic capacity support despite geopolitical developments.
There have been a lot of discussions about whether semiconductor firms should build advanced packaging and testing capacity in the US. The US government has expressed hope that advanced packaging and testing capacity be built in America, but it's up to chip clients and their OSAT partners to decide whether it's cost-efficient to run such capacity in the US, the sources said.
None of the above-mentioned firms commented on the report.
Article translated by Rodney Chan
