The Impact of Taiwan's Legacy Chip Industry Contemplating the Future This title suggests that the post will explore the current state and future prospects of Taiwan's legacy chip industry, considering both internal and external factors such as Chinese foundries' growth and US-China trade tensions.

The Impact of Taiwan's Legacy Chip Industry Contemplating the Future

Taipei, Taiwan – When Powerchip Technology entered into an agreement with Hefei in eastern China to establish a new chip foundry in 2015, it hoped this move would provide better access to the promising Chinese market. Nine years later, however, that same foundry, Nexchip, has become one of its biggest rivals in the legacy chip space.

The Rise of Chinese Foundries

Nexchip is part of a growing trend among Chinese foundries, including Hua Hong and SMIC, which are quickly gaining market share in the $56.3 billion legacy chip industry. This shift prompted the Biden administration to initiate an investigation and has alarmed the Taiwanese industry.

These Chinese foundries are threatening the long-held dominance of Powerchip, UMC, and Vanguard International in the market for chips used in cars and display panels by slashing prices and embarking on aggressive capacity expansion plans.

The Impact on Taiwan's Legacy Chip Industry

As a result, Taiwanese foundries are being forced to retreat or focus on more advanced and specialty processes. Mature-node foundries like us must transform; otherwise, Chinese price cuts will further disrupt our operations, said Frank Huang, chairman of Powerchip Investment Holding and its listed unit Powerchip Manufacturing Semiconductor Corp., which was reorganized into in 2019.

The Future of Taiwan's Legacy Chip Industry

UMC noted that the expansion of capacity globally has created severe challenges for the industry. To address these challenges, UMC is working with Intel to develop more advanced and smaller chips, as well as diversify beyond legacy chipmaking.

Trade tensions between Washington and Beijing may provide some relief, according to executives in Taiwan, as companies seek to secure supply chains and secure non-Chinese made chips.

The Impact of US-China Trade Tensions

US President Donald Trump has announced plans to impose tariffs as high as 100 percent on semiconductors made outside the United States. However, efforts by Washington to curb China's chip industry growth, alongside worsening relations between Beijing and other countries, may also affect the future of this industry.

Conclusion

The legacy chip industry in Taiwan is facing unprecedented challenges as Chinese foundries continue to gain market share. While some Taiwanese companies may shift their focus towards more advanced and specialty processes, others are likely to specialize their processes and diversify away from legacy chips. The impact of US-China trade tensions remains a wildcard that could affect the future of this industry.

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Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.