ST and Hua Hong to Produce 40nm MCU Chips in China

Jean-Marc Chery, CEO of European semiconductor manufacturer STMicroelectronics (ST), has revealed a new partnership with Chinese wafer foundry Hua Hong Semiconductor. This collaboration is seen as crucial for maintaining a competitive edge in the semiconductor industry, emphasizing the importance of having local manufacturing facilities in China.

Chery's statement comes at a time when governments across Europe, the U.S., and China are increasingly urging companies to establish more semiconductor production locally. Many chipmakers are expanding their operations in Singapore and Malaysia to better serve the Asian market.

STMicroelectronics is the largest producer of energy-efficient Silicon Carbide (SiC) chips for electric vehicles, with major customers including Tesla and Geely. Chery stressed that China's market is indispensable for the company, particularly in the electric vehicle (EV) sector, which is the largest and most innovative globally. He explained that it would be nearly impossible to compete effectively without a local presence in China.

"If we allow another company to take our market share in China, especially in the industrial and automotive sectors, local players will dominate," Chery noted. "China's domestic market is so large that it provides a strong platform for competition in other countries as well."

Furthermore, Chery shared that STMicroelectronics is leveraging the best practices and technologies it has developed in China for use in Western markets.

Before making these comments, the company updated its long-term financial forecast during an investor day, addressing the challenges it faces due to a slowdown in the industrial chip market.

In 2023, STMicroelectronics formed a joint venture with San'an in Chongqing to produce SiC wafers. On Wednesday, the company announced that it is collaborating with Hua Hong Semiconductor, China's second-largest custom chip manufacturer, to produce 40nm-node microcontroller (MCU) chips in Wuxi by the end of 2025.

Fabio Gualandris, ST's manufacturing chief, highlighted that local production in China offers several advantages, including cost-effective supply chains, compatibility with local needs, and reduced risks from government restrictions. Additionally, manufacturing chips outside of China would mean missing out on the country's fast-paced development in the electric vehicle sector.

"They are advancing rapidly," Gualandris noted. "If you're not present there, you won't be able to react quickly enough."