Reuters: Supply chains put Taiwanese tech companies in a bind, especially in packaging materials

Taiwan's technology suppliers are facing supply constraints, particularly in areas such as packaging materials, as some struggle to meet surging demand, Reuters reported. Taiwan is a major supplier to the global electronics ecosystem, with parts used in everything from refrigerators and smartphones to cars and missiles.

It is reported that over the past week, some major companies in the industry have said that market demand for their products is strong, especially in the automotive and high-end computing fields, but it is difficult to ensure production, especially as production from various regions has been affected by China's new crown blockade.

Leading Taiwanese flat-panel maker AU Optronics saw its first-quarter net profit fall by more than half from a year earlier. While AUO supplies displays to top automakers such as Tesla and high-end laptops, its production is sometimes limited by much lower-tech packaging materials.

"The less critical the material, the more we lack it. Because their inventory tends to be the lowest, so we need to ship a lot. But the biggest challenge right now is transportation," Chairman Paul Peng said on the earnings call. These materials are usually purchased from China, where the lockdown has led to factory closures and transportation restrictions.

Demand for mobile phones and some consumer products appears "relatively weak," said Tung Chee-hwa, chief financial officer of ASE, a Taiwanese chip testing and packaging company, on an earnings call. "But from our perspective, I think the overall situation is still very healthy. In high-performance computing, in networking and in automotive, we still see very, very strong momentum."

Powerchip Semiconductor Manufacturing Co., a supplier of power management chips, sent a similar message. Chairman Frank Huang said at a shareholders' meeting that although current demand is not as strong as before, Powerchip's production capacity is still running at full capacity.

The same strong demand also benefited United Microelectronics, a rival to Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker. United Microelectronics said it was having problems meeting customer demand even as laptops and smartphones showed some weakness.

Delta Electronics, a supplier of power components to companies including Apple and Tesla, said it is expanding manufacturing “everywhere” and is particularly bullish on electric vehicles. It noted that demand for its electric vehicle products is strong even from traditional automakers such as Ford Motor and General Motors.