Taiwanese microchip company sells Chinese branch due to pressure
Taiwan's King Yuan Electronics Co (KYEC), one of the world's largest chip-related end-service companies , has divested its entire stake in a subsidiary at its manufacturing hub in Suzhou, eastern Jiangsu province, as part of efforts to exit mainland China amid geopolitical tensions and changes in the chip supply chain with the US.
KYEC unit KYEC Microelectronics Co has sold its entire 92.16% stake in subsidiary King Long Technology (Suzhou) for 4.9 billion yuan ($676 million) to a consortium including King Legacy Investments , LePower (HK), Anchor Light Holdings, Suzhou Industrial Park Industrial Investment Fund, TongFu Microelectronics Co and Shanghai State-owned Enterprises Integrated Improvement and Experiment Private Equity Fund Partnership, according to an April 26 announcement posted on KYEC's website.
The deal is expected to be completed by the third quarter of this year. The funds raised will be used to invest in world-class technologies and testing equipment “to meet strong demand in artificial intelligence (AI), high-performance computing and related markets,” according to KYEC.
“The board of directors has decided to withdraw from [mainland] China's semiconductor manufacturing sector,” KYEC said.
King Yuan Electronics Corp's subsidiary, King Long Technology (Suzhou), operates this factory at the Suzhou Industrial Park in eastern Jiangsu province
The company, based in Taiwan's northwestern city of Hsinchu, said its decision was based on the impact of U.S. restrictions on mainland China's semiconductor industry, which has led to changes in the supply chain. of chips across the Strait, and on the intensification of market competition.
Taiwan-listed shares of KYEC closed 3.56% higher at NT$98.90 (US$3.03) on Monday.
KYEC did not immediately respond to a request for comment the same day.
An increasingly obligatory choice
The company's decision to exit China is a reflection of the growing pressure on chip companies in Taiwan, even those working in the service sector, to make a clear choice between working in China or working in the US.
This tension has pushed companies such as Foxconn Technology Group, Taiwan Semiconductor Manufacturing Co and Intel to expand production to other markets outside mainland China, such as South Asia or India.
KYEC's decision to exit mainland China comes weeks after the Biden administration updated semiconductor export restrictions against China to fill gaps in previous restrictions imposed last October, aimed at preventing development of the Beijing's artificial intelligence for military use.
KYEC had been one of the first Taiwanese semiconductor companies to start production on the mainland after China's accession to the World Trade Organization in December 2001.
As demand for advanced semiconductors in China, used in electric vehicles, cloud computing and AI applications, continues to grow, Beijing has called for greater self-sufficiency in high-end technologies and support for domestic businesses to purchase chip products locally. However, Taiwanese technology and this market must withdraw due to the international situation.
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The article Taiwanese microchip company sells Chinese branch due to pressure comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/azienda-del-settore-microchip-di-taiwan-cede-la-filiale-cinese-per-le-pressioni/ on Tue, 30 Apr 2024 05:15:24 +0000.