ASE expands in Malaysia and Huawei rolls out a $3,000 phone

Hi everyone! This is Lauly, waving hello from the gloomy weather in Taipei.

It has been a month since I last hosted #techAsia. During that time, Taiwan had a nine-day Lunar New Year holiday, though for me it was not as chill and restful as it used to be. For one, my entire family — including my toddler — came down with gastroenteritis one after another and we had to go to the emergency room twice during the break. It turns out Taiwan has been experiencing waves of flu and gastroenteritis for a while. It took me a week just to find a clinic in Taipei that had flu shots and Covid vaccines in stock, as so many people rushed to get the jabs. The government even had to import more to support the sudden demand.

Personal issues aside, the tech industry also had a turbulent few weeks, from the emergence of China’s DeepSeek to US President Donald Trump’s frequent threats of tariffs on imports from not only China but also neighbours Canada and Mexico.

Trump also singled out Taiwan by name several times. He said the democratic-ruled island “took our chip business away” and warned he would levy a tariff of 25 per cent or more on semiconductor imports. His comments have added further uncertainty to the global chip industry and to relations between the US and its “like-minded” allies.

Hours after Trump’s latest criticism, Taiwan President Lai Ching-te held a rare live-streaming press conference in which he called on the Taiwanese people to “rest assured” in the island’s relations with the US Lai vowed to expand Taiwan’s investment and procurement in the US to level out the trade balance, and to increase Taiwan’s defence budget — a hint it would buy more weapons from Washington. He also said the two sides would work closely on “development and manufacturing of AI chips and advanced semiconductors”.

Will Lai’s message help mitigate the risks from tariffs, soothe the uncertainties of its all-important chip industry and draw the island closer to the Trump administration? We don’t know.

I got an unexpected call from an executive of an Apple and Nvidia supplier recently, asking me to join him for a coffee break nearby. He seemed calm but spent the next hour complaining about the recent on-and-off tariffs on Mexican goods and the uncertainty over who the next tariff target might be. He said there is no way for any tech supplier to make any decision about overseas capacity planning at the moment. “Such planning isn’t playing house. Can you estimate how much it costs and how much time it takes to move capacity from one place to another?”

On top of that, it is getting harder for suppliers to shift production capacity away from China these days. Beijing has stepped up scrutiny of exports of equipment and materials by suppliers of Apple and other American tech companies, slowing their expansions to south-east Asia and India, Nikkei Asia reported last month.

Checking with one of my sources last week, it seems the situation is continuing.

“It’s hard to move more [from China], and the destination we moved to could face higher tariffs,” a manager of a Google supplier said. “I don’t see a solution here.”

Big things in small packages

ASE Technology Holding, the world’s biggest chip packaging and testing supplier, is opening by far its largest overseas operation in Penang, Malaysia, as it looks to robotics and artificial intelligence for new growth, Nikkei Asia’s Cheng Ting-Fang reports from Malaysia.

Company CEO Tien Wu praised Malaysia’s social and economic stability and said the country has been taking a neutral stance between the US and China. “It’s a location that most of our clients accept, and in terms of distance, Malaysia sits between Taiwan and India, where we expect the chip supply chain could grow later.”

ASE joins a string of chip companies expanding in the south-east Asian country as the trend for supply chain diversification rolls on. Its affiliate Siliconware Precision Industries, also known as SPIL, a key supplier to MediaTek and Nvidia, is building its first facility in Penang, while Intel has its most important overseas packaging and testing site there. European chipmaker Infineon opened its largest power semiconductor plant in the country, and Lam Research has established a sizeable chipmaking tool facility there.

Separately, ASE also announced plans to invest $200mn to trial next-generation chip packaging technology built on square substrates, rather than traditional round wafers, in an attempt to boost AI computing performance.

Making it in India

Apple has quietly doubled down on India as a manufacturing partner for its flagship product, the iPhone, in perhaps the most prominent global example of the “China plus one” strategy.

The company has long relied on China, but rising tensions between Beijing and Washington have underlined the need to diversify, accelerating a process that started during the pandemic, write the Financial Times’ Michael Acton and John Reed.

Apple has found willing partners in India, including Tata Electronics, which has made a big bid for its manufacturing business. It aims to build 25 per cent of iPhones in India by 2027, but the challenges involved are significant.

India remains largely a “screwdriver” operation, requiring flown-in components. Visas for crucial Chinese employees, as well as key equipment, have been held up during disputes between the two Asian giants. Gender-based violence in India remains a concern in a workforce that relies upon women. Apple must navigate these issues if it is to reach “economies of scale” in the country.

Call it a comeback

Charts showing Huawei's performance in the global smartphone market

Huawei hosted a rare overseas smartphone launch event in Kuala Lumpur as the embattled Chinese tech giant aims to restore its consumer electronics business to global prominence despite an ongoing US crackdown on the company, Nikkei Asia’s Cheng Ting-Fang, Lauly Li and Noman Goh write.

The launch event, introducing its most expensive tri-fold Mate XT phone with a starting price tag of Rmb19,000 ($2,745), comes two months after Huawei brought its bi-fold Mate X6 and midrange line-up Nova 13 in Dubai. South-east Asia and the Middle East are important markets for Huawei if it is to keep its overall business, including its vital telecom equipment segment, afloat in the face of Washington’s restrictions.

The events underscore Huawei’s determination to take its smartphones — powered by the company’s own Harmony operating system — back to the global stage. More than 93 per cent of its smartphones are currently sold in China.

Going deep

Chinese internet giant Tencent is joining the growing list of Big Tech companies embracing DeepSeek’s artificial intelligence model, a move that is expected to shake up China’s chatbot market, Nikkei Asia’s Cissy Zhou writes.

Tencent has begun beta testing access to DeepSeek on Weixin, the domestic version of its WeChat app, according to the company, coming amid similar moves by Baidu, Huawei, NetEase, BYD and ByteDance’s Lark. The beta test allows Weixin users to access an “AI Search” feature through the app’s search box, choosing between “Quick Response” or “Deep Search”, powered by DeepSeek-R1.

These moves turn up the heat on Baidu, which is already seeing some of its users shift to Weixin Search from Baidu Search, the dominant service in the Chinese search market since Beijing banned Google in 2010. ByteDance, whose Doubao logged the highest daily active users among chatbots last year, is feeling the pressure, too.