Malaysia and Vietnam Implement Strict Quarantine Measures
Corporate Losses Mount as Factory Operations Halt Repeatedly
[Asia Economy Reporter Kim Suhwan] As the spread of COVID-19 continues unabated in Southeast Asian countries, the global supply shortage is worsening. In particular, Malaysia and Vietnam, where semiconductor and home appliance production facilities are concentrated, are experiencing significant damage as local governments implement strict quarantine measures, leading to repeated factory shutdowns.
On the 23rd (local time), Bloomberg reported that the recent rapid spread of COVID-19 in Malaysia could further worsen the semiconductor supply shortage.
The media stated, "Malaysia is a major hub for semiconductor testing and packaging," and "factories of numerous semiconductor companies such as Infineon, NXP, and STMicroelectronics are expected to be affected."
Recently in Malaysia, the weekly average of new confirmed cases reached 20,000, a sharp increase from about 5,000 in June. As lockdown measures have been implemented, semiconductor factory operations have also been halted, raising concerns that supply chain disruptions will become a reality.
According to data from Susquehanna Financial Group, as of last month, the semiconductor lead time (the period from semiconductor order to shipment) reached 20.2 weeks, the longest since statistics began in 2017.
Infineon stated in its recent earnings report, "Supply bottlenecks in Malaysia are expected to cause significant revenue impacts this quarter."
The Malaysia Semiconductor Industry Association said, "Malaysia is a key player in global semiconductor trade," and "if production disruptions occur here, a chain reaction of supply chain disruptions will spread throughout the related industry ecosystem."
IHS Markit noted that semiconductor packaging and testing plants are particularly vulnerable to the virus, stating, "These plants require more workers than wafer manufacturing plants." It analyzed that if factory operations are halted due to lockdowns, the impact on semiconductor packaging and testing plants will inevitably be greater than in other sectors.
The COVID-19 situation is also worsening in Vietnam, another semiconductor production hub in Southeast Asia and home to many Korean company factories. According to Worldometer, as of the 23rd, the 7-day average of new confirmed cases reached a record high of 10,668.
In response, authorities deployed military forces to Ho Chi Minh City, Vietnam's largest city, and surrounding areas to enforce quarantine measures, implementing a strict lockdown that prohibits all outdoor activities for citizens.
IT media SamMobile reported, "Samsung Electronics' Ho Chi Minh City factory is also expected to significantly reduce operations due to the lockdown," adding, "With the lockdown measures that began last month, the operating rate is only 40%, and production impacts are expected to worsen."
The semiconductor supply shortage is also spreading to the automotive industry. Ford announced last week that it would halt operations at one pickup truck plant in the U.S., citing "the semiconductor supply shortage caused by the recent COVID-19 surge in Malaysia" as the reason.
Toyota also suspended operations at 14 plants mainly in Southeast Asia last week, while Nissan and GM warned that the prolonged lockdown in Malaysia is worsening the semiconductor supply shortage.
Bloomberg reported, "The automotive industry is already expected to suffer production losses worth $100 billion this year," and analyzed, "The extent of the industry's damage will depend on how effectively Southeast Asian countries respond to COVID-19."
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