China’s No 2 foundry to make legacy chips for Europe’s STM, serving mainland market

The move signifies the importance of the Chinese EV market and the country’s progress in legacy chipmaking

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Published: 9:00pm, 21 Nov 2024Updated: 1:21am, 22 Nov 2024

European chip giant STMicroelectronics (STM) said it will outsource the fabrication of legacy semiconductors to China’s second-largest foundry, in a deal that strengthens China’s role in the legacy chip sector.

STM chief executive Jean-Marc Chery said at the company’s annual investor day in Paris on Wednesday that the firm will use Hua Hong Semiconductor to make 40-nanometre industrial microcontrollers (MCUs) for the mainland Chinese market starting next year, as part of a strategy to manage the risks of supply chain disruptions.

“We acknowledge that the market we serve is becoming increasingly complex [and that] we face competition from the rise of Chinese car makers, which is fast reshaping market dynamics,” Chery said, adding that it was crucial for STM to stay relevant in the world’s largest auto market via its localisation strategies.

“Through the partnership with the Hua Hong Group, ST will be able to respond more quickly to the needs of the Chinese market and capitalise on opportunities in fast-growing areas such as electric vehicles,” Chery said.

STMicroelectronics CEO Jean-Marc Chery (left) seen with Infineon CEO Jochen Hanebeck and NXP CEO Kurt Sievers at the Electronica & SEMICON Europa conference, in Munich, Germany November 11, 2024. Photo: Reuters

The remarks from one of Europe’s largest car chipmakers come as geopolitics have upended the global semiconductor supply chain, with the US, European Union, China, Japan and South Korea all investing huge amounts to strengthen their capacity in semiconductor manufacturing amid fears of disruptions.

The move signifies the importance of China’s EV market and the country’s progress in legacy chipmaking, amid Beijing’s tech self-sufficiency efforts to overcome Washington’s export restrictions aimed at keeping US core tech out of the hands of the Chinese military.