The epidemic has been recurring, are Taiwanese electronics factories about to be "paralyzed"?

On April 24, China Taiwan has 5,092 confirmed cases , and the local government has shortened the home quarantine period to 7 days. At the same time, employees of technology companies are still being infected.

The Taoyuan City Government in Taiwan announced on April 23 that due to the large number of foreign workers gathering at the Pegatron Guishan Plant, it is expected that the number of confirmed cases will reach 500 on the 23rd, and the Guishan Plant will be shut down for 5 days starting from the 22nd . In response, Pegatron confirmed that the production line in the Guishan Plant has been temporarily shut down.

It is reported that Pegatron has two factories in Taiwan, located in Xindian and Guishan. The Guishan factory, where a cluster of migrant workers were infected, was newly purchased in 2020 and currently mainly produces automotive electronics and industrial computers.

It is worth mentioning that Tesla is the most important automotive customer of Pegatron's Guishan plant . Pegatron manufactures center consoles and electronic control units for it, mainly supplying Tesla's US plant.

According to Taiwanese media reports, industry insiders believe that Pegatron's main production capacity is concentrated in mainland China, and the production capacity of its factories in Taiwan accounts for a relatively small proportion. The shutdown of the Guishan factory in Taoyuan has limited impact on Pegatron.

But Looking at Pegatron's mainland factories, the situation is not more optimistic .

On April 12, as Shanghai and Kunshan were successively locked down, Apple's major contract manufacturer Pegatron announced that its Shanghai and Kunshan factories had stopped production. On April 11, analyst Ming-Chi Kuo said on social media that Pegatron might have to wait until the end of April to resume work at the earliest.

Although Pegatron still has factories in Suzhou and Chongqing in operation, its iPhone revenue from factories in Shanghai and Kunshan accounts for 50% to 60% . Pegatron's revenue in April may be seriously affected.

In addition to Pegatron, on April 23, IC design giant MediaTek also reported that employees in multiple offices had been confirmed to be infected.

The Hsinchu City Government Health Bureau confirmed that three MediaTek employees were diagnosed with the virus , and the diagnosis was announced a few days ago. Taiwanese media reported that many MediaTek employees are currently in home quarantine, with a total of about 10 people. It is reported that MediaTek has arranged for employees to work in separate buildings to avoid cross-infection.

In addition to the outbreaks at the Pegatron and MediaTek factories mentioned above, Huaying Electronics also announced on the evening of April 23 that an employee had tested positive for PCR.

Taiwan has a large number of companies in the three key links of design, manufacturing, and packaging and testing, including design factories such as MediaTek, Novatek, and Realtek; wafer factories such as TSMC, World Advanced, Nanya Technology, and Micron; and packaging and testing factories such as ASE, Powertech, and King Yuan Electronics. In addition, foundries such as Foxconn, Quanta, Compal, and AUO also have factories in Taiwan.

Amid tight global semiconductor supply, Taiwan has seen repeated local outbreaks. As a major semiconductor hub, the stability of Taiwan's IC industry supply chain continues to receive close attention.

Previously, Xin Shiye reported on the impact of the epidemic in many parts of China on the chip industry. It mentioned that my country's integrated circuit output fell by 4.2% overall in the first three months of this year. In March alone, my country's chip output fell by 5.1%.

Some analysts said that the blockade caused by the COVID-19 pandemic in Shanghai and other regions was one of the main reasons for the impact on production. (Recommended reading: China's chip industry, seriously injured by Omicron? )

In this epidemic lockdown, Taiwanese manufacturers have suffered particularly heavy losses and can be said to have been severely hurt .

Taiwan's epidemic prevention and control policies are not as strict as those in mainland China. If the impact of the local epidemic in Taiwan on the production capacity of Taiwanese factories is just a minor injury, then the impact of the epidemic in mainland China can be regarded as a halving.

In 2020, Taiwan's investment in the mainland increased by 41.5% year-on-year, of which the electronic components manufacturing industry accounted for 26.8%. According to statistics from the Taiwan Financial Supervisory Commission, there are currently 851 Taiwanese listed companies with factories in Shanghai, Kunshan, Suzhou and other places. From the data, it can be seen that a large number of Taiwanese factories have invested and set up factories in the mainland, and a large part of them are engaged in the manufacturing of electronic components.

The epidemic in the Yangtze River Delta has recurred. According to statistics from the Taiwan Financial Supervisory Commission, at least 161 Taiwanese listed companies have stopped production in their local factories and production lines .

Kunshan is the base camp for Taiwanese businessmen .

On April 2, Kunshan, a city in southern Jiangsu near Shanghai, implemented control measures. This time, 49 Taiwanese companies alone stopped production (incomplete statistics). Well-known companies such as Pegatron's subsidiary Kunshan Shishuo and Jialianyi's Kunshan factory are in the most stringent control areas.

On April 12, Kunshan announced that the silent period would be extended by 7 days.

On April 22, Kunshan announced that the control would be extended for another 7 days.

On April 21, IC substrate manufacturer Xinxing announced that its subsidiary Kunshan Dingxin Electronics Co., Ltd. was originally scheduled to gradually resume production in accordance with government regulations from April 20, but now it will temporarily suspend operations from April 21 to April 27 in accordance with the local government's epidemic prevention policy, and the two factories have returned to a shutdown state again.

Xinxing has been shut down since April 2 and will continue to do so until April 27, which means that Xinxing will be shut down for nearly 25 days .

The government issued another emergency shutdown order, and it was not just Xinxing that was affected .

Taiwanese companies in Kunshan, such as Jiabaiyu, Xingnenggao, Jingding, Qincheng, Lianzhan Investment Holdings, Tongzhi, Zhengwen, and Acer, have also announced that their suspension of work will be extended to April 27. Their business categories include printed circuit boards (PCBs), battery modules, network communications, semiconductor equipment, housings, connectors, etc.

Among them, Fuyao Semiconductor (Kunshan), a subsidiary of semiconductor equipment manufacturer Jingding, said that it would temporarily suspend operations from April 21 to April 27. It is estimated that production in April will be reduced by about 30% , and the loss of production capacity can only be made up by employee overtime and outsourcing production capacity.

The factory of the notebook OEM giant Compal in Kunshan has also stopped production. According to data, nearly half of Compal's notebook computers are produced in the Kunshan factory.

According to Taiwanese media reports, a local Taiwanese factory said that it now appears that Kunshan's shutdown will last until at least the 27th. Relying on the raw materials that are still in stock, the factory is conducting closed production, but the raw materials are not in stock anymore, "we can only do our best, and the logistics will also run as much as possible." What is certain at present is that orders for April will definitely be postponed, and "customers are also very anxious . "

On April 15, three employees of Chicony's Suzhou plant were diagnosed with COVID-19. Some of Chicony's Suzhou plants have been shut down since April 15, and the shutdown is expected to last 7 to 14 days. Chicony said that some of the shut-down plants in Suzhou account for 14% of Chicony's production capacity . Chicony Electronics mainly produces keyboards, cameras, power supplies, ADSL and other products, among which keyboard production and sales rank first in the world.

Previously, passive component manufacturer Jiabang's Suzhou plant also announced a shutdown; Lelon's Suzhou subsidiary partially suspended operations until April 22.

Shanghai has implemented zoning control since March 28, and local companies have suspended operations in line with epidemic prevention policies.

On April 13, Quanta Computer (Shanghai) Co., Ltd., a subsidiary of Apple's Macbook OEM, announced a shutdown. Quanta's Shanghai plant produces laptops, servers and consumer electronics, accounting for about 20% of Quanta's laptop production capacity . Quanta is almost the only OEM for Apple's MacBook, so among Apple's major product lines, Apple's MacBook was the most affected by Quanta's shutdown.

It is reported that with the Shanghai government announcing the white list of companies resuming work, TSMC and ASE's local factories have gradually resumed production in recent days.

In addition to the Yangtze River Delta, the Pearl River Delta is also where a large number of Taiwanese businessmen gather .

On March 14, the entire city of Shenzhen was closed. Hon Hai (Foxconn's parent company) issued a statement on March 14, saying that the Shenzhen Foxconn Longhua and Guanlan factories had stopped production. The Shenzhen subsidiary of Xinxing, a major IC substrate manufacturer, also announced a shutdown on the same day. Subsequently, a large number of Taiwanese electronics factories announced the shutdown of their Shenzhen factories, with an incomplete statistics of more than 30.