Luxshare Precision Industry's impending acquisition of Qorvo's backend fabs in China is unlikely to have a significant impact on Taiwan-based compound semiconductor firms, according to industry sources.
The Apple device manufacturer and the US chip vendor have reached an agreement for Luxshare to purchase Qorvo's assembly and testing facilities in Beijing and Dezhou, China. As part of a newly developed long-term supply agreement, the China-based Luxshare will serve as Qorvo's backend partner.
PA frontend technology is key
The industry sources noted that the Qorvo-Luxshare deal will have little impact on Taiwan's supply chain, as Taiwanese firms are still leaders in key frontend technology for power amplifiers (PA). The sources surmised that Apple was behind the Qorvo-Luxshare deal.
The US-headquartered Qorvo is an RF IDM in the supply chain of Apple, which is also the biggest customer for Qorvo, the sources said. Taiwanese compound semiconductor firms, such as Win Semiconductors, Advanced Wireless Semiconductor (AWSC), and Visual Photonics Epitaxy (VPEC), are upstream partners of Qorvo, the sources said.
However, the sources pointed out that the two plants that Qorvo is selling handle backend services with lower profitability. For both Qorvo and Taiwan's compound semiconductor firms, the key is the frontend manufacturing technology, for which Taiwanese firms are still the leaders, the sources said. The Qorvo-Luxshare transaction will not introduce too much change to the PA sector, the sources added.
Qorvo CFO Grant Bowen has noted that the transaction will further reduce the company's capital intensity while supporting its long-term gross margin goals and maintaining ties with customers in China.
More stability for Apple's supply chain
The sources said that China's JCET is a major player in the global OSAT sector, and in a country where the backend sector is already quite mature, Luxshare's acquiring Qorvo's plants will not change the PA landscape much, the sources said.
For the Taiwanese compound semiconductor firms in the upstream, the acquisition deal in the downstream will have little impact, the sources said.
A major portion of Qorvo's sales has been coming from Apple, the sources noted. But Qorvo's clientele also includes Huawei, Xiaomi, Lenovo, Oppo, Samsung Electronics, and Qualcomm, the sources noted.
Luxshare is a major manufacturer of Apple's wearable devices, such as AirPods, Apple Watch and Vision Pro, the sources said, adding that it remains to be seen how Qorvo and Luxshare's long-term supply contract is going to be designed.
China's compound semiconductor sector has been picking up momentum fast amid the US-China trade war, and the US has extended its trade restrictions to China's compound semiconductor sector. The Qorvo-Luxshare transaction is expected to bring more stability to Apple's supply chain, the sources said.
None of the above-mentioned companies commented on this report.
Article translated by Rodney Chan
