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While the global focus is on AI computing power, HBM, and advanced packaging, a more profound transformation is taking place in the analog semiconductor field. Industry giants such as Texas Instruments (TI), Analog Devices (ADI), Qorvo, and Infineon, which have long represented "cash cows" and stable returns, have all, for the first time in recent memory, adjusted their manufacturing and packaging and testing footprints in the past two years. Amid the twin trends of wafer production reshoring and packaging and testing offshoring, an industry rebalancing characterized by reduced packaging and testing operations and a more focused manufacturing strategy is underway.
I. "Reduced Packaging and Testing" Becomes the New Industry Norm
ADI's Fab-Lite Model
Recently, ADI and ASE Technology Holding (ASE) signed a Memorandum of Understanding (MOU) for ASE to acquire 100% of Analog Devices Sdn. Bhd., ADI's wholly-owned packaging and testing subsidiary in Penang, Malaysia, along with its manufacturing plant there. Established in 1994, the Penang plant is located in Bayan Lepas, a major industrial hub, and covers an area of over 680,000 square feet. The two parties aim to sign a definitive agreement in the fourth quarter of this year, with the transaction expected to be completed in the first half of 2026. After the deal, ASE will continue to handle ADI's back-end analog chip production.
In addition, ADI and ASE plan to sign a long-term supply agreement, under which ASE will provide manufacturing services to ADI. ADI also intends to co-invest with ASE to upgrade the technology at the Penang plant. By securing outsourced production capacity through a long-term agreement, ADI maintains control over technology while improving capital efficiency.
In fact, this deal is just another step in ADI's transition to the Fab-Lite model. Since 2020, ADI has gradually reduced its in-house manufacturing burden by shutting down old packaging and testing lines in the Philippines and Ireland, outsourcing some wafer production to TSMC and GlobalFoundries, and integrating the factory systems of Maxim after its acquisition.
The Fab-Lite model is not about "de-manufacturing" but rather a strategic choice: retaining core processes and key manufacturing capabilities while outsourcing capital-intensive, low-value-added operations to specialized foundries.
According to ADI's data, the company is still increasing its internal investment. By the end of 2025, it expects to double the production capacity at its US and European factories to support the growth of its BCD, MEMS, and RF product lines. Meanwhile, the ratio of capital expenditure to revenue has dropped from 10% in 2020 to about 6%, while the gross profit margin has remained stable at around 70%. This indicates that ADI has successfully balanced "light capital" and "stable profits."
ADI aims to double the output of its existing US and European factories by 2026 (Source: ADI)
In the current cycle, the Fab-Lite model has become a "neutral solution" for analog companies, allowing them to maintain manufacturing capabilities without being weighed down by it.
Infineon's "Smart Manufacturing Mix"
In February last year, Infineon, a major European automotive chip manufacturer, announced the sale of its two back-end packaging and testing plants in Cavite, the Philippines, and Cheonan, South Korea, to ASE. The two parties signed a long-term supply and manufacturing cooperation agreement (LTSA), under which ASE will continue to provide high-reliability (HiRel) and automotive-grade product packaging services to Infineon. The transaction was completed in August 2024, with around 1,200 employees (about 900 in Cavite and 300 in Cheonan) transferring to ASE.
As a long-standing representative of the IDM model, Infineon has long adhered to a structure of "in-house front-end wafer production + in-house back-end packaging and testing." However, since the 2020s, the demand for power and automotive-grade chips has skyrocketed, leading to a surge in investment in front-end 12-inch Si/SiC production, while the return on capital for back-end packaging and testing has declined relatively. As a result, as early as 2021, Infineon proposed the "Smart Manufacturing Mix" strategy: "Build a flexible and resilient global production system through in-house core manufacturing capabilities and a network of external partners."
By selling the plants, Infineon freed up fixed assets and reduced its annual capital expenditure by about €300 - 400 million, allowing it to focus resources on expanding its front-end 12-inch production capacity in Villach, Austria, and Kulim, Malaysia. Signing the LTSA with ASE ensures stable packaging and testing capacity in Southeast Asia while enabling Infineon to avoid operational risks.
Although Infineon has ceded ground in back-end packaging and testing, it is increasing its self-sufficiency in front-end manufacturing. For example, on February 20, 2025, the European Union approved a €920 million subsidy from Germany to support Infineon's construction of a new chip manufacturing plant in Dresden, Germany (the MEGAFAB-DD project), with a total investment of about €3.5 billion. The plant will produce chips for industrial, automotive, and consumer applications, representing Infineon's largest single investment to date. Another example is that on July 2, 2025, Infineon announced that its "300mm GaN manufacturing roadmap" is progressing as planned, with samples expected to be available in Q4 2025.
Qorvo's Focus
At the end of 2023, Qorvo announced the sale of its packaging and testing plants in Beijing and Dezhou, China, to Luxshare Precision for approximately $232 million, including the entire factory buildings, equipment, and employees. In a statement, Qorvo said the move was aimed at "reducing capital intensity and supporting long-term gross margin targets." After the transaction, Luxshare will continue to provide packaging and testing services to Qorvo. The company also said it will optimize its production capacity layout in China and focus on the core manufacturing of RF, PA modules, and power devices.
In the past few years, Qorvo has been expanding simultaneously in the mobile RF, automotive power, and defense communication sectors, leading to a continuous increase in capital expenditure. However, as the smartphone market stabilizes and competition in the RF module market intensifies, the utilization rate of its packaging and testing lines has declined. Coupled with geopolitical uncertainties (especially the risks associated with its assets in China), selling non-core production lines has become a practical choice.
Qorvo is shifting from "full-chain integration" to "asset focus." It retains high-value-added RF front-end design and wafer manufacturing in the United States (such as the GaAs line in Greensboro, North Carolina) while outsourcing capital-intensive, low-margin back-end operations. Amid high capital pressure, geopolitical risks, and declining gross margins, Qorvo's "focus" is actually a self-protective contraction.
II. ASE Becomes the Big Winner
"Reduced Packaging and Testing" Has Become a Consensus Among Analog Giants. ADI, Infineon, Qorvo, and others have successively divested their packaging and testing assets in China, Malaysia, and the Philippines, outsourcing non-core back-end factories to specialized OSATs such as ASE and Luxshare. This not only helps them avoid geopolitical and labor risks but also frees up cash flow to support R & D investment in new processes, AI architectures, and SiC/GaN projects.
The deeper reason for this phenomenon is that packaging and testing are at a technological crossroads. Advanced packaging technologies such as Chiplet, 2.5D, Fan-Out, and PowerSiP have transformed packaging and testing from the "end of manufacturing" to the "front end of the system," but the equipment investment and engineering thresholds have soared. For analog and power device manufacturers, building in-house facilities is no longer economically viable.
In this wave of "IDM de-packaging and testing," ASE Technology Holding is quietly emerging as the biggest winner in this structural transformation. It has not only acquired the factories of ADI and Infineon at the asset level but also deepened its long-term supply agreements with customers at the technology level, evolving from a "contract manufacturing service provider" to a "strategic manufacturing partner." While analog and power device manufacturers are reducing their burdens and freeing up cash flow, ASE is entering a golden growth period through acquisitions, capacity expansion, and technological evolution, becoming the "new center" of the entire back-end manufacturing industry chain.
In 2025, ASE launched its fifth packaging and testing plant (ASE Penang P5) in Bayan Lepas, Malaysia, expanding the factory area to approximately 3.4 million square feet and making it the largest semiconductor packaging and testing base in the region. The new plant mainly targets AI chips, automotive power devices, and high-performance computing packaging, marking the official formation of a "dual-engine" layout in Southeast Asia - with the two centers in Penang and Ipoh operating in synergy to cover advanced packaging, testing, and system-level modules.
At the capital level, ASE invested approximately $892 million in equipment in the first quarter of 2025, with about $395 million for the packaging business and $472 million for the testing business. According to Reuters, the company predicts that its advanced packaging and testing revenue will more than double in 2025 compared to 2024, reaching approximately $1.6 billion. Meanwhile, ASE is evaluating the construction of new advanced packaging capacity in the United States to meet the "nearshoring" and supply chain security needs of North American customers.
In the next decade, the boundaries between IDMs and OSATs will become increasingly blurred as they form a symbiotic system through closer manufacturing collaboration, long-term supply agreements, and joint technology R & D.
III. The Shutdown of 8-Inch Wafer Fabs Intensifies
On the manufacturing side, another quiet structural adjustment is taking place.
The Accelerated Exit of 150mm Lines: As the industry focuses on process nodes below 65nm and equipment and materials age, most 150mm (6-inch) wafer lines have exited mainstream production. Take Texas Instruments (TI) as an example. In 2025, the company shut down its 150mm wafer fab in Texas and made personnel adjustments. Earlier, it sold its old factory in Greenock, Scotland, to Diodes Inc. These production lines can no longer meet the current efficiency and yield requirements of automotive and industrial customers in terms of technology and cost, so their exit from the market is inevitable.
The Gradual Reconfiguration of 200mm Lines:
During ST's Q3 earnings conference in October, the company announced that it will further increase investment in 300mm wafers and adjust the layout of its two 200mm factories in Agrate and Crolles. The former will gradually shift to MEMS production, while the latter will expand its 300mm production line. At the same time, ST also confirmed that its 8-inch SiC integrated park in Catania, Italy, is under construction, with the goal of migrating the existing 6-inch production capacity to a more efficient 8-inch platform.
In June, NXP also announced plans to close four 8-inch wafer fabs in Nijmegen, the Netherlands, and the United States to strategically transition to more advanced 12-inch wafer production, thereby improving production efficiency and reducing costs. This is part of its restructuring plan, and the entire transition period is expected to last several years, during which production will be transferred to new 12-inch wafer fabs in Singapore and Germany.
At the beginning of the year, Infineon announced an agreement with SkyWater to sell its 200mm wafer fab in Austin, Texas. SkyWater will operate the fab as a foundry, increasing the available production capacity for basic chips at the 130nm - 65nm nodes in the United States, which are crucial for many industrial, automotive, and defense applications. The two companies also signed a long-term supply agreement, enabling Infineon to maintain a strong, efficient, and scalable manufacturing presence in the United States.
The "factory shutdown wave" is just a surface phenomenon. The essence is the rebalancing of mature manufacturing. In an era where old and new processes coexist and silicon and silicon carbide technologies resonate, the story of 8-inch wafers continues - just in a different role, shifting from the "leading actor" to the "fulcrum" that supports the resilience and flexibility of the global semiconductor supply chain.
IV. Texas Instruments: The Lone Warrior of the Fully Integrated IDM Model
While the industry is divesting packaging and testing assets and seeking contract manufacturing partnerships, TI is going against the trend by continuously increasing its investment in wafer production and packaging and testing in the United States.
On June 18, 2025, TI announced plans to invest over $60 billion in seven semiconductor factories in the United States, mainly for the construction of seven semiconductor factories across three large manufacturing bases in Texas and Utah. This investment is expected to create over 60,000 new jobs in the United States, representing the largest investment in basic semiconductor manufacturing in US history.
Among them, TI's largest factory in Sherman, Texas, will receive an investment of up to $40 billion for the construction of four wafer fabs: SM1 (which will start production this year, just three years after its groundbreaking) and SM2 (under construction). In addition, TI also plans to build two new wafer fabs, SM3 and SM4, to meet future demand.
TI's new 300mm semiconductor wafer fabs, SM1 and SM2, in Sherman, Texas (Source: TI's official website)
TI's second wafer fab, RFAB2, in Richardson continues to operate at full capacity, following in the footsteps of RFAB1, the world's first 300mm analog wafer fab launched by the company in 2011.
TI is accelerating the construction of its first 300mm wafer fab, LFAB1, in Lehi. In 2021, TI also acquired Micron's 12-inch wafer fab in Lehi, Utah. In addition, the construction of TI's second wafer fab in Lehi, LFAB2, which is connected to LFAB1, is also progressing smoothly.
Most of TI's analog products use the 0.18 - 0.5μm nodes. Currently, it has almost fully committed to 12-inch wafer fabs. By replacing 8-inch wafers with 12-inch ones, the cost per wafer can be reduced by 30 - 40%. Instead of pursuing "advanced processes," TI uses scale to reduce costs and self-control to ensure stability.
Not only in the United States but also in Japan, TI has added a GaN manufacturing plant. In October last year, TI's plant in Aizu, Japan, began production. As the production capacity of the Aizu plant increases, combined with its existing GaN manufacturing plant in Dallas, Texas, TI's internal GaN power semiconductor production capacity will increase fourfold. TI also said that by 2030, its in-house manufacturing ratio will exceed 95%.
In the automotive, industrial, and energy sectors, the customer lifecycle often lasts 10 - 20 years. TI has chosen the most stable path - full-chain self-control to withstand cyclical fluctuations. However, the price is high capital expenditure. TI's Q3 2025 earnings report revealed that the company's capital expenditure in the past 12 months was approximately $4.8 billion. It is the only analog giant still adhering to self-control in both wafer production and packaging and testing, and it is the most "contrarian" lone warrior in this high-capital cycle.
Conclusion
Currently, the global semiconductor supply chain is being redivided. IDM factories in the United States and Europe are accelerating the reshoring of front-end production (localizing wafer fabs), while the packaging and testing segment is systematically migrating to Southeast Asia and Taiwan, China. From "self-sufficiency" to "symbiotic collaboration" and from "owning factories" to "controlling certainty," this is the manufacturing philosophy of the analog semiconductor industry in the AI era.