The global semiconductor equipment leader ASMPT has closed its Shenzhen factory, affecting 950 employees. This seemingly sudden decision reflects a profound restructuring of multinational companies’ strategies in the Chinese market.On August 11, 2025, global semiconductor equipment supplier ASMPT announced the official closure of its Advanced Semiconductor Equipment (Shenzhen) Co., Ltd. (AEC) located in the Bao’an District of Shenzhen, impacting approximately 950 employees. This factory, which still achieved a net profit of 20.6 million yuan in 2024, did not close due to losses but rather became a casualty of ASMPT’s global strategic adjustments.The decision to close the Shenzhen factory was approved by shareholders on August 8, followed by the establishment of a liquidation committee for “voluntary liquidation.” The company expects to incur a one-time restructuring cost of approximately 360 million yuan, including severance pay, production cessation costs, and inventory write-offs, but anticipates annual savings of about 115 million yuan in operating costs.In recent years, it has become common for multinational companies to adjust their layouts in China. ASMPT’s decision is not an isolated case but part of a global strategic restructuring in the semiconductor industry. These production cessation decisions may seem sudden, but they are, in fact, rational choices made by companies in response to the optimization of global supply chains.As a technology-intensive and capital-intensive industry, semiconductor capacity layouts always change in accordance with market demand and technological evolution. While announcing the closure of the Shenzhen factory, ASMPT emphasized that its factory in Huizhou, mainland China, will continue to operate as an important manufacturing hub. This indicates that the move is not an exit from the Chinese market but rather an optimization and integration of capacity.In ASMPT’s strategic landscape, the closure of the Shenzhen factory is a necessary step to enhance its global cost competitiveness. The company candidly stated that this move will strengthen its cost competitiveness, flexibility, and operational resilience in global manufacturing operations.Similar strategic adjustments have become the norm in the semiconductor industry. In 2025, Micron announced the cessation of DDR4 memory production, reallocating resources to higher value-added products like DDR5 and HBM. Samsung Electronics also exited the MLC NAND business, shifting capacity to the automotive electronics sector. These cases point to a trend: industry giants are optimizing resource allocation through “decluttering.”
Shenzhen, as a window for China’s reform and opening up, once attracted a large number of foreign-funded enterprises due to policy advantages and labor force benefits. Now, as the city’s development enters a new stage, the manufacturing landscape is undergoing profound changes.Compared to surrounding cities, Shenzhen’s operating costs have become significantly higher. Rental costs are 2-3 times that of Huizhou, and employee wages are also 20%-30% higher than in Huizhou. This cost disparity has been magnified against the backdrop of global supply chain optimization adjustments, forcing companies to reassess the operational value of being in Shenzhen.After decades of development, Shenzhen has formed a relatively complete electronic information industry chain and innovation ecosystem. With the rise of local companies like Huawei and ZTE, Shenzhen’s role in the global technology industry chain is shifting from a manufacturing center to an innovation hub.In the face of rising cost pressures, Shenzhen’s industrial policies are gradually being optimized. The focus of urban development is shifting towards supporting high value-added and high-tech industries, such as research and development, design, and high-end manufacturing. For large manufacturing companies like ASMPT, Shenzhen’s cost structure has become difficult to support their profitability needs.Shenzhen represents a microcosm of China’s economic transformation and upgrading. As the demographic dividend fades and land resources become scarce, developed coastal cities will inevitably experience a gradient transfer and structural optimization of manufacturing. The transfer of standardized, large-scale production processes to lower-cost regions is an inevitable law of urban development.ASMPT particularly emphasized in its announcement that the closure of the Shenzhen factory will not affect supply to customers, as the group’s supply chain has been fully adjusted to ensure continuity of delivery. This indicates that modern enterprises are seeking a new balance between efficiency and resilience in their supply chain design.Events such as the pandemic and US-China trade frictions have made companies aware of the risks of excessive concentration in supply chains. ASMPT has multiple manufacturing bases globally, including its headquarters in Singapore, Munich in Germany, and Phoenix in the USA. Through diversified layouts, companies can enhance their risk resistance capabilities.Geopolitical factors have also become an important consideration in corporate supply chain decisions. In 2024, the US government’s tariff threats on imported chips and semiconductor products continued to escalate, creating a “stagflationary shock” that raised end product prices while suppressing manufacturing investment growth. Companies are forced to adjust their global layouts to respond to this new situation.In its supply chain adjustments, ASMPT has adopted a “China +1” strategy rather than “de-Chinaization.” While closing the Shenzhen factory, the company has strengthened its layout in the Huizhou base and transferred some capacity to Southeast Asia. This strategy maintains its presence in the Chinese market while reducing risks through diversified layouts.The semiconductor industry, as a global industry, reflects a broader restructuring of the global economy through its supply chain adjustments. Companies are no longer simply pursuing cost minimization but are beginning to seek a balance between efficiency, resilience, and risk.The closure of ASMPT’s Shenzhen factory reveals, from one perspective, the profound changes that China’s manufacturing industry is undergoing. Industrial upgrades are not only happening at the national level but are also reflected in the strategic decisions of each enterprise.ASMPT plans to reallocate the cost savings from closing the Shenzhen factory to research and development investments, such as the development of next-generation adhesive-free thermal compression bonding equipment. This technology has already achieved breakthrough orders in AI chip and high-bandwidth memory applications, representing the future direction of advanced packaging technology.Advanced packaging has become one of the key paths to enhance chip performance. As Moore’s Law approaches physical limits, improving overall chip performance through packaging technology is becoming increasingly important. ASMPT’s thermal compression bonding technology is regarded by major customers in the industry as the “second most important technology after lithography.”
The Chinese semiconductor industry is also accelerating its process of self-sufficiency amid this wave of global restructuring. By the end of 2023, ASMPT will package and spin off all its semiconductor equipment business in China, establishing Aoxinming in Lingang, Shanghai, inheriting ASMPT’s legacy in the advanced packaging field. This localized cooperation model not only introduces advanced technology but also promotes the improvement of the domestic industrial chain.The role of Chinese enterprises in the global semiconductor industry chain is quietly changing. From initially being involved in low-end packaging and testing, to now gradually emerging in the advanced packaging field, the Chinese semiconductor industry is undergoing a process of qualitative change from quantitative change. According to Bernstein’s forecast, by 2027, China’s self-sufficiency rate for AI chips will increase from 17% in 2023 to 55%.Behind the strategic adjustments of enterprises and the upgrading of urban industries is the painful transformation of a large labor force. The closure of ASMPT’s Shenzhen factory affects 950 employees, whose career trajectories are forced to change, reflecting the importance of human capital in economic transformation.ASMPT has committed to developing placement plans for affected employees and treating them with a “fair and respectful attitude.” Reports indicate that employees with over 15 years of service may receive a compensation plan of “N+6,” but some employees still hope to receive a “2N” compensation standard.The challenges faced by employees in re-employment are not only related to compensation standards but also to skill matching. As the manufacturing industry transforms and upgrades, the demand for traditional operational positions decreases, while the demand for new skills such as automation equipment operation and industrial robot programming increases. This poses new requirements for the skill structure of the existing labor force.For advanced manufacturing hubs like Shenzhen, talent cultivation and skill enhancement are important components of urban industrial policy. Governments, enterprises, and educational institutions need to work together to build a continuous learning system to help the labor force adapt to changes in industrial structure.The semiconductor industry, as a technology-driven sector, has an increasing demand for high-skilled talent. While closing manufacturing plants, ASMPT may expand its R&D investment in China, which will pose different requirements for talent structure. Urban industrial upgrades and talent structure optimization need to be advanced simultaneously.As the equipment of the Shenzhen factory falls silent, ASMPT’s other factories in the Asia-Pacific region are accelerating their transformation. The Singapore headquarters is increasing R&D investment, focusing on thermal compression bonding technology; the Huizhou factory is absorbing some of the capacity transferred from Shenzhen, seeking a new positioning based on its advantages in land and labor costs.In summary: The semiconductor industry has never stopped moving forward.