India, Vietnam Might Be More Efficient Alternative Chipmakers Outside China Amid US Chip Curb

Joseph Henry, Tech Times 13 December 2022, 02:12 am

The US and China have had a long history of chipmaking wars since the previous decade. To date, the chip curbs remain as obstacles for Chinese chip makers who want to export processors to North America.

As the Biden administration intensifies its restrictions against the sleeping giant, the event prompts other companies to think of potential places for their businesses outside China.

Some chipmakers think that it's good to start the production of the chips in Southeast and South Asia, particularly in Vietnam and India.

Chipmaking Potential in Other Markets

India, Vietnam Might Be More Efficient Alternative Chipmakers Outside China Amid US Chip Curb

(Photo : Adi Goldstein from Unsplash)
Chipmakers eye India and Vietnam as potential locations for their chipmaking business as US restriction continues.

In an interview with CNBC, the chip industry experts said that while the US continues to restrict Chinese chip makers in exporting their products to the country, it remains quite undisrupted by the changes.

However, with the continuous punishment that Chinese companies face at present, some chipmakers want to explore relocating their sites to nearby countries such as India and Vietnam.

According to Walter Kuijpers, a partner from KPMG says that there's an increase of 30 to 40% when it comes to the possibility of chipmaking expansion in the SEA region.

"Corporates are seeing merits in segregating supply chains rather than having a single point of reliance ... Recent geopolitical developments are expected to accelerate these strategies that are already in motion," Kuijpers said.

Somehow, investors think that the end game of the chipmaking industry is China until the US curb arrives to impact the overall condition of the business.

It should be noted that the chipmaking operations in China are not only hampered by the export restrictions in America.

It's also important to note that the production is also affected by COVID-19 lockdowns, supply chain issues, skyrocketing costs of labor, and the geopolitical ties with other countries.

Since China is quite falling as a hotspot for semiconductor manufacturing, Deloitte's executive director Jan Nicholas thinks that it's good to explore moving to nearby locations for production.

According to him, the companies might consider Southeast Asia as a "natural choice" for relocation of their plants outside China.

While Taiwan and South Korea won't be able to address the gap due to their neutrality, other nations such as India, Vietnam, and Singapore might serve as an alternative to them, according to Cornell University's Tech Policy Lab director Sarah Kreps.

Can China Establish its Own Branding in the Semiconductor Industry?

In a surprising twist of events last month, Apple unexpectedly helped YMTC, a China-based 3D NAND memory maker in looking for engineers who could work for the company.

According to Tom's Hardware, three anonymous sources disclosed that some Western firms were extending help to their Chinese counterparts. However, the Cupertino giant nor YMTC did not respond to the report.

Earlier this month, the dramatic drop in the semiconductor imports of China showed up at 14.4% in the last 11 months. The previous record suggested that China managed to import 582.1 billion units from 2021. It's smaller compared to this year's record which only sits at 498.5 billion units.

When it comes to its desire to pursue the chip making business in the country, the experts believe that China will struggle because it still needs help from other countries.

Tech Times reported that China would need to rely on other known chipmaking brands to fully adapt to the technology. Even its homegrown semiconductors are still sourced from foreign companies.