The epidemic in Malaysia, a global chip hub, is out of control: hundreds of people at chip factories have been infected and more than 20 have died

Latest update time：2021-08-30 18:35

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The epidemic in Malaysia has continued to worsen recently. In order to control the new crown epidemic, Malaysia has "closed the country" for two weeks since June 1. According to CCTV News, the "full lockdown" measures originally scheduled to end on June 28 will be extended again. Malaysian Prime Minister Muhyiddin did not specify when the "full lockdown" measures will be extended. However, the number of new crown pneumonia patients in Malaysia is still growing. Recently, the number of new patients per day has exceeded 10,000 for 31 consecutive days. On August 16, the number of new confirmed cases reached 19,700.

According to The Paper, at STMicroelectronics' chip supplier's packaging plant in Muar, Malaysia, more than 20 of its 3,000 employees died due to the epidemic, hundreds of people were infected, and the employees are facing the test of life and death.

Many local semiconductor factory production lines are required to maintain low-manpower operations and reduce production loads. Some factories will be closed once infections occur. This may further aggravate the current global "chip shortage" situation.

It is worth mentioning that Malaysia is known as the "semiconductor packaging and testing center", accounting for nearly 13% of the global semiconductor packaging market. In 2019, it exported 569.5 billion yuan worth of electronic products and related components, accounting for nearly 40% of the country's foreign trade exports that year.

Malaysian Prime Minister Muhyiddin resigns

According to Xinhua News Agency on the 17th, Malaysian Prime Minister Muhyiddin said on the 16th that he had submitted his resignation to the Supreme Head of State Abdullah and resigned as prime minister.

In a televised speech on the same day, Muhyiddin said that because 15 members of the House of Representatives withdrew their support for him and his cross-party cooperation initiative was rejected by the opposition, he lost the simple majority support of the House of Representatives and therefore resigned as prime minister in accordance with the constitution.

On August 16, Muhyiddin arrived at the National Palace in Kuala Lumpur, Malaysia. (Photo by Zhang Wenzong, Xinhua News Agency)

Muhyiddin became Prime Minister of Malaysia in March 2020, replacing Mahathir who had suddenly resigned.

Since the beginning of this year, the epidemic in Malaysia has become increasingly serious, causing many people to be dissatisfied with the Muhyiddin government. UMNO Chairman Zahid and some UMNO MPs recently announced the withdrawal of their support for Muhyiddin on the grounds of poor response to the epidemic. Muhyiddin made a televised speech on the 13th, promising a series of reform measures in exchange for cross-party cooperation, but was rejected by the opposition.

After these efforts failed, Muhyiddin was forced to resign after 17 months in office, becoming the shortest-serving prime minister in Malaysia's history.

On March 10, 2020, in Putrajaya, Malaysia, Malaysian King Abdullah (center) attended the swearing-in ceremony of Muhyiddin's cabinet. (Photo from Xinhua News Agency, provided by the Malaysian Information Bureau)

The Malaysian National Palace issued a statement on the 16th saying that the Supreme Head of State Abdullah accepted the resignation of Muhyiddin and his cabinet on the same day, which took effect immediately. Abdullah agreed that Muhyiddin would serve as interim prime minister before a new prime minister was elected.

Muhyiddin's resignation means that Malaysia is caught in political uncertainty at a critical juncture in its response to the COVID-19 pandemic. Local analysts generally believe that under the current political situation, it is unclear who will be Muhyiddin's successor, and the new prime minister will face similar challenges as Muhyiddin after taking office.

The severe epidemic has caused some chip factories to close, and Bosch and others have been affected

According to The Paper, on August 17, a senior executive of Bosch China, an automotive electronics company, posted on WeChat Moments that due to the severe epidemic in Malaysia, a semiconductor chip supplier's factory in Muar, Malaysia, was required by the local government to close some production lines until August 21. Bosch's ESP/IPB, VCU, TCU and other chips will be directly affected, and it is expected that they will be basically out of supply in August, which will have a huge impact on China's automotive industry.

Later, an STMicroelectronics official confirmed that this was ST's chip packaging plant in Malaysia. The Bosch executive said, "More than 20 of the 3,000 employees at the Muar plant died due to the epidemic, hundreds of people were infected, and they were facing a test of life and death."

The COVID-19 pandemic has had a huge impact on the local semiconductor industry. Wang Shoutai, chairman of the Malaysian Semiconductor Industry Association, said: "Some factories have been infected, forcing them to close."

Public information shows that Malaysia is a global packaging and testing center and the seventh largest exporter of semiconductor products in the world. About 50 global semiconductor giants have set up packaging and testing plants in Malaysia, most of which are multinational companies, including AMD, NXP, ASE, Infineon, STMicroelectronics, Intel, Broadcom, Micron, Texas Instruments, etc.

In addition to international manufacturers, Malaysia's local packaging and testing manufacturers also include Inari, Unisem (acquired by Huatian Technology in 2018), etc.

In addition, passive component manufacturers from Taiwan, including Walsin Technology, Wang Quan, Chilisin, and Guangyu, all have factories in Malaysia.

Compared with other Southeast Asian countries, Malaysia has always had a unique position in the global semiconductor packaging and testing market. Southeast Asia accounts for 27% of the global semiconductor packaging and testing market, and Malaysia accounts for nearly 13% of the market share. In 2019, Malaysia exported a total of 372.7 billion ringgit (equivalent to about 569.5 billion yuan) of electronic products and related parts, accounting for nearly 38% of the country's foreign trade exports that year, contributing 6.8% of the country's gross domestic product (GDP) and employing 575,000 employees in 2020.

According to data from the United Nations, Malaysia's share of integrated circuit exports has been among the highest in the world since 2002. In 2018, Malaysia's share of integrated circuit exports surpassed Japan and was on par with the United States.

In addition, Wang Chuan, which has a factory in Malaysia, estimates that its monthly production capacity reaches 15-17 billion resistors, and Kamaya Electric, a subsidiary of Huaxin Technology, also has a monthly production capacity of 15-16 billion resistors. The resistor production capacity of these two Taiwanese manufacturers in Malaysia alone accounts for 7.5% of the world's total.

It is reported that the Malaysian government currently requires factory production lines to maintain low manpower operation of only 10-20%. Industry insiders said that this is equivalent to just maintaining the state of production lines not shutting down, and almost no production can be carried out.

In fact, as early as March last year during the epidemic, Malaysia had already taken "lockdown" measures, which at that time triggered a global shortage and price increase of semiconductors.

According to TrendForce research, the global passive component (MLCC) market will face supply challenges due to the extension of the nationwide movement control by the Malaysian government. Among them, high-end MLCC is the most in short supply, and the terminal products corresponding to the main shortage items include mobile phones, laptops, network communications, servers and 5G base stations.

Under the pressure of the extended lockdown in Malaysia, other chip manufacturers with factories in Japan, such as Murata Manufacturing, Kyocera, and Samsung, may benefit from it. From the perspective of various terminal applications, since Apple will launch new products in the third quarter, the main MLCC suppliers of iPhone and Macbook Pro, Murata, Taiyo Yuden, and Kyocera, will gradually usher in peak demand in the third and fourth quarters.

Due to the spread of the Delta variant, factories and ports in many Asian countries have been paralyzed

According to CCTV News, Singapore's Lianhe Zaobao quoted relevant reports on the 17th saying that affected by the Delta mutant strain, many Asian countries are facing a new wave of epidemics, causing factories and ports to be paralyzed, and impacting the supply chain of the world's largest manufacturing finished product production site.

According to reports, after the global outbreak of the COVID-19 pandemic, the shortage of container ships caused transportation costs to soar, and the shortage of semiconductors and other supplies made prices even more expensive. Now, the Delta variant has set off a new wave of epidemics, which can be said to be adding insult to injury.

According to United Nations estimates, about 42% of the world's manufactured goods come from Asia. With the holiday shopping season approaching at the end of this year, orders have increased, but the Delta variant has spread rapidly, paralyzing factories and ports in many Asian countries, which may have an impact on the global supply chain.

While Indonesia, Malaysia, the Philippines, Vietnam and Thailand account for 5.7% of global exports, disruptions in those countries are likely to affect larger economies, especially in electronics, according to estimates by French bank Natixis. Half of U.S. semiconductor imports come from Southeast Asian countries. Japan and South Korea have also been affected. South Korea's Samsung Electronics disclosed last month that revenue from its mobile phone business had fallen due to a new outbreak in Vietnam.

Source: Daily Economic News

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