Chinese firms look to Malaysia for assembly of high-end chips: Report

More Chinese semiconductor design companies are reportedly tapping Malaysian firms to assemble a portion of their high-end chips.

A growing number of Chinese semiconductor design companies are tapping Malaysian firms to assemble a portion of their high-end chips, keen to hedge risks in case the U.S. expands sanctions on China's chip industry, sources said.

The companies are asking Malaysian chip packaging firms to assemble a type of chip known as graphics processing units (GPUs), according to three people with knowledge of the discussions.

The requests only encompass assembly - which does not contravene any U.S. restrictions - and not fabrication of the chip wafers, they said. Some contracts have already been agreed, two of the people added.

The people declined to disclose the names of the companies involved or to be identified, citing confidentiality agreements.

(For top technology news of the day, subscribe to our tech newsletter Today’s Cache)

Seeking to limit China's access to high-end GPUs that could fuel artificial intelligence breakthroughs or power supercomputers and military applications, Washington has increasingly placed restrictions on their sales as well as on sophisticated chip-making equipment.

As those sanctions bite and an AI boom fuels demand, smaller Chinese semiconductor design firms are struggling to secure sufficient advanced packaging services at home, analysts have said.