ASE and Analog Devices Forge Strategic Collaboration to Boost Semiconductor Manufacturing in Penang

ASE Technology Holding Co., Ltd. (ASE) and Analog Devices, Inc. (ADI) announced on October 21, 2025, a major strategic collaboration centered on Penang, Malaysia—a key hub in Southeast Asia’s semiconductor industry. The partnership is designed to strengthen both companies’ positions in advanced chip manufacturing while addressing growing global demand for more resilient and diversified supply chains.

Under a binding Memorandum of Understanding, ASE intends to purchase 100% of the equity in Analog Devices Sdn. Bhd., including its established manufacturing facility in Bayan Lepas, Penang. This facility, operational since 1994 and spanning over 680,000 square feet, is a significant asset in the region’s electronics manufacturing ecosystem[1][2]. The transaction is expected to be finalized in the first half of 2026, following the completion of definitive agreements in late 2025 and pending regulatory approvals.

A core element of the collaboration is a long-term supply agreement, under which ASE will provide manufacturing services for ADI’s portfolio of analog, mixed-signal, and digital signal processing chips. This arrangement ensures ADI maintains access to advanced packaging and testing capabilities, while ASE gains a strategic customer and the opportunity to serve additional clients from the Penang site[1][2]. ADI has also committed to co-invest with ASE in upgrading the facility’s technology and workforce skills, signaling a joint commitment to innovation and operational excellence.

“The proposed acquisition of ADI’s Penang facility is a strategic move designed to broaden ASE’s global manufacturing capabilities and achieve a higher degree of operational flexibility and scale,” said Tien Wu, Chief Operating Officer at ASE Technology Holding Co.

“Assembly technology and resilient manufacturing are critical elements for fueling ADI’s short- and long-term growth,” added Vivek Jain, Executive Vice President of Global Operations & Technology at ADI. “We are teaming up with ASE to expand the Penang factory’s capability and capacity. This strengthens our technology offering and supply chain resiliency as we continue to offer best-in-class support for our customers.”

The collaboration is seen as a positive development for Penang’s semiconductor ecosystem, with regional analysts highlighting the potential for increased investment, technology transfer, and job creation. While global media coverage remains limited, local outlets in Malaysia have expressed optimism about the deal’s impact on the regional economy and its role in reinforcing Southeast Asia’s position in the global semiconductor supply chain.

Strategic Implications for the Semiconductor Industry

This partnership reflects a broader industry trend toward vertical collaboration and supply chain diversification, especially in the wake of recent global disruptions. By combining ASE’s expertise in semiconductor assembly and test services with ADI’s leadership in analog and mixed-signal technology, the companies aim to deliver more advanced, reliable, and scalable solutions to their customers.

The Penang facility’s expansion and modernization are expected to not only support ADI’s product roadmap but also attract new business for ASE, further solidifying Malaysia’s reputation as a critical node in the global electronics manufacturing network. Employees at the site are set to benefit from continued career opportunities and access to cutting-edge manufacturing technologies, thanks to the co-investment in upskilling initiatives.

Looking Ahead

As the semiconductor industry continues to evolve, strategic partnerships like this one between ASE and Analog Devices are likely to become more common, as companies seek to mitigate risk, accelerate innovation, and meet the complex demands of a rapidly changing market. The Penang collaboration stands out as a model for how cross-industry alliances can drive growth, resilience, and technological advancement in key manufacturing regions.