Taiwan’s legacy chip industry is under threat from Chinese foundries, particularly Nexchip, which have gained market share by undercutting prices and expanding capacity. Taiwanese companies are being forced to pivot towards advanced chip technology in response to these competitive challenges, with the impact of U.S.-China trade tensions potentially creating new order trends favoring Taiwanese production.

Taiwan’s Powerchip Technology aimed to access the lucrative Chinese market by establishing a chip foundry in Hefei in 2015. However, nine years later, Nexchip, the Chinese foundry resulting from this initiative, has become a major competitor for Powerchip. This shift is attributed to competitive pricing and support from the Chinese government, following pressures for localizing manufacturing and significant losses for Taiwanese firms in the legacy chip sector.

The legacy chip industry, valued at $56.3 billion, consists of chips manufactured on 28 nanometre technology and larger. Taiwanese firms, such as Powerchip, UMC, and Vanguard International, have historically dominated this space. In contrast, Chinese foundries like Nexchip, Hua Hong, and SMIC are swiftly increasing their market share, posing significant challenges to Taiwanese manufacturers amid global shifts in supply chain strategies.

Taiwan’s legacy chip industry faces increasing competition from Chinese foundries, which offer lower prices and aggressive production expansions. Taiwanese firms are moving towards advanced and specialized processes to adapt to market challenges. With geopolitical tensions affecting supply chains, a shift toward non-Chinese manufacturing is emerging, potentially offering Taiwanese manufacturers new opportunities despite the competitive landscape.

Original Source: www.usnews.com

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