Sumitomo Electric Industries To Fabricate 5G Chips In US From September: Report

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Nikkei said that semiconductors made in the U.S. will be supplied to the U.S. and European units of communication equipment manufacturers

Amid the ongoing global chip crunch, Japanese chip manufacturer Sumitomo Electric Industries will now reportedly beginning to fabricate 5G semiconductors in the US, starting from September. 

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As per the report by Nikkei Asia, the chipmaker is planning to double supply capacity with its U.S. operations

Sumitomo Electric has invested about $63 million in setting up a production facility in a factory in New Jersey operated by U.S. contract manufacturer II-VI. The facility will produce transistors that are a core component of 5G base stations and serve to amplify signals.

The chipmaker holds a 70 per cent share of the product globally and is a major supplier to Chinese telecom Huawei Technologies. It uses gallium nitride as a material instead of the frequently-used silicon.

Nikkei said that semiconductors made in the U.S. will be supplied to the U.S. and European units of communication equipment manufacturers such as Sweden’s Ericsson and Nokia in Finland. 

As 90 percent of Sumitomo Electric’s current supply is believed to be bound for Chinese manufacturers, the company aims to boost sales to U.S. and European clients.

This new strategy is also in line with Washington’s policy of strengthening its domestic semiconductor industry. The U.S. has been on alert due to the semiconductor shortage and tensions in China-Taiwan relations, and is discussing a bill that will invest $52 billion in semiconductor production and R&D in the U.S.

Leading semiconductor manufacturers such as Taiwan Semiconductor Manufacturing Co. and South Korea’s Samsung Electronics have announced intentions to invest in the U.S.

According to a French research firm, the market size of gallium nitride transistors will hit $522 million in 2025, double the 2018 figure.

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