European and Japanese IDM chipmakers exploring partnership with China fabs

TrendForce reported that major automotive chip suppliers such as STMicroelectronics, Infineon, NXP, and Renesas have been exploring partnerships with Chinese foundries—including SMIC and HHGrace to address the China’s vast domestic market. This trend is particularly evident in the automotive sector. This trend is driven by the Chinese government setting a goal for domestic automakers to increase the use of locally produced chips to 25% by 2025 while also encouraging foreign companies to localize their production. Historically, Chinese foundries have faced challenges securing automotive MCU outsourcing orders from IDMs due to slower progress in eFlash/eNVM manufacturing processes and the lengthy automotive-grade and OEM verification processes required. However, recent geopolitical pressures, along with the launch of affordable EV models in China, have driven automotive suppliers to prioritize cost-efficient solutions. This cost focus—combined with the “China for China” strategy—has led to a more proactive space for European and Japanese IDMs to collaborate with these foundries. TrendForce reports that STMicroelectronics has taken the lead by partnering with HHGrace to develop 40nm industrial/automotive-grade MCUs. Mass production is expected by late 2025 if development progresses smoothly. Meanwhile, Renesas and Infineon began discussions with Chinese foundries in...