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Malaysia's relaxation of movement controls is expected to improve the current situation of global chip shortages.

Published :9/14/2021 9:23:51 AM

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As the growth rate of confirmed cases of new coronary pneumonia slowed down, Malaysia began to relax its movement control regulations. As a major global packaging and testing center, Malaysia's recovery from the epidemic is expected to improve the current situation of chip shortages.


Earlier, affected by the epidemic in Malaysia and Thailand, automakers such as Toyota, Ford, General Motors, and Skoda cut production significantly due to shortage of parts. But for now, this situation is beginning to improve. For example, starting from this Friday, Klang Valley, the most populous area and major industrial center in Malaysia, will enter the second phase of the country's four-phase recovery plan.

Kenanga Investment Bank investment analyst Samuel Tan said that the improvement of the epidemic in Malaysia is a good sign for the semiconductor industry. He said that most local semiconductor factories may have taken preventive measures to prevent a further surge in confirmed cases. Even if there is a confirmed diagnosis, the factory will not be shut down directly.

The report pointed out that semiconductor sales accounted for about 6.8% of Malaysia's GDP, and there were about 575,000 people engaged in this industry. Globally, Malaysia accounts for 7% of total semiconductor trade, and its packaging capacity accounts for 13% of the world’s total. This is why the changes in the epidemic in Malaysia affect the entire semiconductor industry.

Despite this, there are still individual vendors facing operational challenges. Last week, three employees of the semiconductor company Unisem Berhad died of the new crown pneumonia, and the factory was forced to close until September 15. This also casts a shadow on the industry's optimistic outlook.

It is understood that Infineon, NXP and STMicroelectronics all have factories in Malaysia. Wong Siew Hai, chairman of the Malaysian Semiconductor Industry Association, said that as many as half of the companies in the country’s semiconductor industry currently have a capacity utilization rate of 80%, and there is a lot of room for growth in the coming months. But automakers such as Skoda CEO Thomas Schafe still said that they are being "hugely affected" by the closure of local semiconductor factories, and he expects the chip shortage to continue until 2022.

In addition, some analysts said that Malaysian government policies will play an important role in the local semiconductor industry. Earlier during the lockdown period, the electrical and electronic industries were allowed to operate at a capacity of 6 adults. Critics say that the government's permission for some manufacturers to continue operations shows that it is biased against certain industries.