New Covid wave in Asia to worsen global chip shortage: Report

Hong Kong: A fresh wave of Covid-19 in Asia where vaccination is still in early stages can further worsen the global chip supply chain, the media reported.

According to the Wall Street Journal, China, Taiwan and many other parts of Asia kept the pandemic in check better than the US and Europe.

“Immunisation efforts in Asia, meanwhile, have lagged behind and authorities have largely kept in place tougher border controls to keep the virus out. Still, Covid-19 has spread,” the report said on Saturday.

Taiwan, a key hub for chip manufacturing, is currently experiencing a surge of Covid cases.

Starting on May 10, Covid infections jumped from one to three-digit figures within a matter of days. Most of the 411 total deaths from Covid-19 on the island were caused by the ongoing outbreak, reports South China Morning Post.

“Before early May, Taiwan’s daily Covid-19 cases had rarely exceeded single digits,” the report mentioned.

The outbreak has hit chip manufacturers in Taiwan.

“At King Yuan Electronics Co, one of the island’s largest chip testing and packaging companies, more than 200 employees have tested positive for the virus this month, while another 2,000 workers have been placed in quarantine — cutting the company’s revenue this month by roughly a third,” according to the WSJ report.

TSMC, which makes chips for Apple, Qualcomm, and many other big tech companies, says it has not yet been affected.

The global semiconductor shortage will persist through 2021 and is expected to recover to normal levels by the second quarter of 2022, a Gartner report said last month.
Across most categories, device shortages are expected to be pushed out untill the second quarter of 2022, while substrate capacity constraints could potentially extend to fourth quarter of 2022.

The media report said that factories in Malaysia have had their manufacturing capabilities slowed due to Covid-19.

“All told, the Malaysia Semiconductor Industry Association says the lockdown will reduce output by between 15% and 40%”.

The chip shortage started primarily with devices, such as power management, display devices and microcontrollers.

The shortage has now extended to other devices, and there are capacity constraints and shortages for substrates, wire bonding, passives, materials, and testing, all of which are parts of the supply chain beyond chip fabs.