European chipmaker STMicroelectronics announced on Wednesday that it is partnering with Hua Hong Semiconductor, China's second-largest contract chipmaker, to produce 40-nanometer microcontroller chips in Shenzhen, Guangdong Province, by the end of 2025, according to Reuters.

This collaboration highlights the growing appeal of the Chinese market for global companies, given its vast business opportunities and robust supply chain, according to a Chinese industry observer.

A Hua Hong representative confirmed the partnership to the Global Times on Thursday but did not provide further details.

Jean-Marc Chery, CEO of STMicroelectronics, emphasized the importance of local manufacturing in China to maintain a competitive edge. STMicroelectronics is the leading producer of energy-efficient Silicon Carbide chips for electric vehicles (EVs), counting major automakers like Tesla and Geely among its clients. Chery highlighted that China's market is not only the largest but also the most innovative for EVs, making it difficult to compete effectively from outside the country.

Chery also noted that lessons learned in China are being applied in Western markets, saying, “The missionary story is over.” According to Fabio Gualandris, STMicroelectronics' head of manufacturing, local production in China benefits from cost-effective supply chains and allows the company to stay aligned with China's fast-paced EV development cycle.

The collaboration underscores China's maturity and stability in the global semiconductor supply chain, Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, told the Global Times. Wang pointed out that China's comprehensive supply chain provides abundant resources and support for semiconductor companies. He also noted that China's vast market demand drives innovation and growth in the industry, with the country's technological advancements and strong policy support contributing to international collaborations.

This partnership is part of a broader trend of foreign companies expanding their footprint in China. The recently concluded seventh China International Import Expo in Shanghai saw a total of $80.01 billion in tentative deals for one-year purchases, marking a 2% increase from last year.

On November 1, China eliminated all market access restrictions for foreign investors in the manufacturing sector, signaling a major step in the country's commitment to opening up its economy. Wang emphasized that as China's economy continues to develop and open up, global enterprises are increasingly drawn to the Chinese market's stability and potential, recognizing the strengths of Chinese companies in innovation, quality, and service.