"Semiconductor Supply Shortage Crisis to Last at Least One More Year"

World's 3rd Largest Electronics Contract Manufacturer Singapore Flex Pessimistic Outlook

[Photo by AFP Yonhap News]

[Asia Economy Reporter Park Byung-hee] A pessimistic forecast has emerged that the semiconductor supply shortage will continue for at least another year.

Flex, a Singapore-based Electronics Manufacturing Services (EMS) company ranked third in the world, formerly known as Flextronics, is expected to see the semiconductor supply shortage persist until at least mid-next year, according to major foreign media reports on the 6th (local time).

Flex operates over 100 facilities in about 30 countries worldwide, including Asia, Europe, and North America, producing products for companies such as Ford, Dyson, and Hewlett-Packard (HP). It is listed on the Nasdaq stock exchange in New York and recorded sales of $24.2 billion (approximately 27.8644 trillion KRW) last year. Foreign media reported that Flex's forecast is the most pessimistic among the semiconductor supply shortage forecasts released so far.

Lin Torell, Chief Procurement and Supply Chain Officer at Flex, stated that customers are continuously postponing their estimates on when the semiconductor supply shortage will end. He said, "Semiconductor demand is strong, but customers expect the shortage to continue until the middle to late part of next year depending on the supply of semiconductor raw materials," adding, "Some customers anticipate the shortage to persist through 2023." In particular, there is growing concern among Asian home appliance manufacturers as the recent semiconductor shortage has spread to TVs, smartphones, and home appliances.

Torell expressed concern about Malaysia's situation, where a two-week lockdown was recently decided due to the spread of COVID-19 cases. This is because many semiconductor company suppliers are located in Malaysia. Torell pointed out that even minor issues can lead to major problems in the current situation, and Malaysia's lockdown measures could further worsen the semiconductor shortage.

Levati Advati, CEO of Flex, said that customers view the supply chain disruption caused by COVID-19 as more serious than the US-China trade dispute and are readjusting their supply chains. CEO Advati explained that, especially with rising transportation costs, customers are seeking ways to secure raw materials closer to their production sites, at least in the short term.

As the semiconductor shortage intensifies, semiconductor manufacturers are also expanding their production facilities. However, considering that facility expansion usually takes about two years, the semiconductor supply shortage is expected to continue for some time.