As India imposes high import duties on semiconductor, it is more cost effective for Indian firms to build a local chip plant, Powerchip Chairman Frank Huang said (Representative image. Source: Shutterstock)
Powerchip Semiconductor Manufacturing Corporation, a Taiwanese chipmaker, is in preliminary talks with several Indian conglomerates to help build new chip plants in the country, it said yesterday, Taipei Times reported. It noted that this comes even as India has subsidised local chip capacity build-up.
The memory chip maker’s statement ended six months long speculation that it was looking to invest in India to diversify its operations amid Taiwan’s mounting geopolitical tension, the report added.
Tata Group was reportedly one of the possible partners in talks with Powerchip over building a semiconductor fab, the report added. Powerchip has however not disclosed which companies it is in discussions with.
Moneycontrol could not independently verify the report.
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Powerchip is following similar moves by companies like Taiwan Semiconductor Manufacturing Company (TSMC), United Microelectronics Company and Hon Hai Precision Industry Company.
It has become a trend for Taiwanese semiconductor firms to expand operations globally, after TSMC on January 12 announced its first United States semiconductor investment plan worth $ 40 billion.
“Local semiconductor companies have to now think about globalisation more seriously than before,” Powerchip Chairman Frank Huang told reporters on the side lines of a news conference in Taipei arranged by Taiwan Advanced Automotive Technology Development Association, the report added.
“We are preparing to sign an agreement with India to help it build a plant. It is determined to build one. We are trying to figure out how to support them since we have had similar experience in China,” Huang said, as per the report.
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As India imposes high import duties on semiconductor, it is more cost effective for Indian firms to build a local chip plant, he added. As the talks in India are in the initial stage, Powerchip said that it is unclear what role the company would play — as a technology supporter or an equity investor of a joint venture.
Powerchip Investment Holding Corporation, the parent company of Powerchip, owns a 23.49 percent stake in the company. In October 2015, it also formed the Nexchip Semiconductor Corp with the Sichuan provincial government to build and operate a fab in Chengdu, China; and owns 27.44 percent of its shares. Nexchip makes less-advanced chips such as display driver ICs using 150-nanometer and 90-nanometer processes.
US-China trade disputes are positively affecting Taiwanese manufacturers, as Chinese firms and US companies with operations in China are looking for a second source to prevent their shipments from being blocked by Washington, Huang said. “Taiwan is the best provider of a second source,” he added.
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He said he expects Powerchip’s business to start to rebound in the second half of 2023, after major supply chain inventory adjustments end following COVID-19 disruptions.
“Some notebook computers are still in the process of digesting excessive inventory. The first quarter will be the bottom,” he added.
Powerchip said it is cutting factory utilisation to cope with sluggish demand, but its loading rate is not as low as some chipmakers that halved production in an attempt to weather the downturn, the report said.
The company also said that it is facing delays of six months in ramping up a new 12-inch plant, in Miaoli County’s Tongluo Science Park due to an extended lead time for semiconductor manufacturing equipment.
