November 21, 2024 /SemiMedia/ — STMicroelectronics announced a partnership with Chinese foundry Hua Hong Semiconductor to produce 40nm microcontroller (MCU) chips in Wuxi by the end of 2025. The move aims to strengthen ST’s competitive position in China, particularly in the fast-growing electric vehicle (EV) and industrial sectors.

“China is the largest and most innovative EV market in the world, and competing effectively here requires local manufacturing,” said ST CEO Jean-Marc Chery. “If we lose our market share in China, domestic players will dominate, leveraging their vast local market as a springboard to compete globally.”

Fabio Gualandris, head of manufacturing at ST, cited several reasons for local production, including cost efficiency within the local supply chain, compatibility issues, and the need to mitigate risks from government restrictions. He added that producing elsewhere would mean missing out on China’s rapid EV development cycles. “They move faster,” Gualandris said. “If you’re not there, you can’t respond in time.”

ST has been expanding its presence in China in recent years. In 2023, it partnered with Sanan Optoelectronics to establish a silicon carbide (SiC) joint venture in Chongqing, targeting high-efficiency chips for EVs. The company also applies best practices and technologies learned in China to its global operations to maintain a competitive edge.

The announcement comes as ST updates its long-term financial forecasts during its Investor Day, acknowledging the challenges posed by the downturn in the industrial chip market. As a leading SiC chipmaker, with clients including Tesla and Geely, ST’s reliance on the Chinese market highlights its strategic importance.