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Kinsus Interconnect Technology Eyes Malaysia for New Substrate Facility

Taiwan's Kinsus to Join Malaysia's Growing Chip Supply Chain, Aiming to Diversify Production Outside China
Taiwan
k 3189.TW Mid and Small Cap 2000 Tech 350 Semicon 75
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Kinsus Interconnect Technology, a key supplier for Nvidia and AMD and a subsidiary of iPhone assembler Pegatron, is poised to make a strategic move into Malaysia’s burgeoning chip supply chain. Sources with direct knowledge have informed Nikkei Asia that Kinsus is considering the establishment of a substrate manufacturing facility in Penang, Malaysia. This decision comes as part of the company’s effort to diversify its production base beyond China.

The company has already rented a plant in Penang, where it plans to start a trial run as early as the second quarter of this year, focusing on testing and quality control — the final step in substrate production. Substrates, essential materials for chip construction, are produced by only a few companies globally.

This tentative move into Malaysia is seen as a test to assess whether Kinsus’ solutions can effectively operate within the region. If successful, Kinsus plans to expand its investments in Malaysia, which is rapidly becoming a hub for chip packaging and testing. The initial output from this facility will cater to sectors such as automotive, consumer electronics, and memory chips, with a particular emphasis on automotive applications.

This move by Kinsus is indicative of a broader trend in the chip industry. Substrate

and printed circuit board suppliers, traditionally concentrated in Taiwan and China, are diversifying their production locations due to the ongoing Beijing-Washington tech war. This shift is part of the wider ‘China plus one’ strategy, aimed at reducing over-reliance on Chinese manufacturing.

The growing chip packaging and testing capacity in Malaysia is attracting these suppliers, with Kinsus potentially being the second substrate supplier to establish a presence in the country, following Austria-based AT&S. Industry giants like Intel and Infineon are already increasing their manufacturing capacity in Malaysia, with Intel investing $7 billion to make the country its primary Asian production base.

Analysts from Digitimes Research and the Taiwan Institute of Economic Research highlight the significance of Kinsus’ move to Malaysia, both symbolically and strategically. It represents the first Taiwanese substrate supplier to venture into Southeast Asia, marking a pivotal shift in the regional tech landscape. However, they also caution that the global economic slowdown and ongoing inventory corrections in the chip industry could influence the pace of substrate makers’ overseas expansion.

Kinsus’ foray into Malaysia underscores a dynamic shift in the global semiconductor supply chain, signaling the region’s growing importance in the tech industry.

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