news briefing
On September 13, the South China Morning Post reported that the outbreak in Malaysia had reached its peak while officials began to relax restrictions on going out in public. Klang Valley, the most densely populated area in Malaysia and also an important industrial town, stepped into the second phase of the national recovery plan from the 10th. Serving as a major global packaging and testing center, it is likely that Malaysia can recover from the epidemic and this is expected to improve the current situation of chip shortages.
impact analysis
In recent years, Malaysia has already become the primary semiconductor back-end chip packaging and testing center for the world; major manufacturers like Infineon, NXP, and STMicroelectronics have set up their plants here, resulting in Southeast Asia seizing the market share of 27% for the global packaging and testing market while Malaysia holds 13% of this. Besides this, Malaysia is also a major global production center for passive components; while Taiyo Yuden of Japan is the manufacturer for MLCC (multilayer ceramic capacitor), Nippon Chemicon the leader of aluminum electrolytic capacitors, and Ralec as a subsidiary to Jamicon of the Yageo Group, have also set up plants here.
The spread of the epidemic in Southeast Asia has forced Malaysia to adopt strict lockdown controls. The "Full Movement Control Order" (FMCO) implemented since June restricted production capacity from most factories and caused a huge impact on the electronics supply chain - especially the supply of automotive electronics. Wong Siew Hai, the president of the Malaysian Semiconductor Industry Association, stated that despite this, about half of the semiconductor industry plants in the country have currently achieved a production capacity of 80% and there is plenty of room for growth in the next few months. Nonetheless, international automakers have announced production cuts. For instance, Toyota pointed out that global production will be reduced by about 40% in September 2021, whereas GM estimated to reduce the production of 100,000 vehicles in the second half of 2021 for North America.
Apart from this, Taiwanese PCB manufacturers have also conducted their layout in Southeast Asia but their output value is not large and so does not exert much impact on production capacity. Instead, it is important to pay attention to the chain reaction of the epidemic in the electronics industry. Adding to the risks of the shutdown and shortage of labor in factories, many countries have closed down their major ports in the country to regulate and contain the epidemic, this has worsened container shortages and port congestion in shipping. All of these factors can lead to unsuccessful shipments for the supply chain, aggravate the problem of material shortages, and further affect the growth of the industry in the second half of the year.