The nation’s electronics sector could face disruptions in raw material supplies as early as next month due to the COVID-19 outbreak in China, the Taipei-based Chinese National Federation of Industries (CNFI, 全國工業總會) said on Saturday.
Citing a survey of its 157 member companies, the group said that tech companies are concerned about the availability of raw materials, as many Chinese manufacturers have not yet returned to full production since reopening on Monday last week after several extensions of the Lunar New Year holiday break.
Lockdown policies in at least 48 cities and four provinces across China, and travel restrictions that have shut down highways, railways and public transportation systems have restricted the movement of millions of people and limited the size of factory workforces at numerous plants.
The CNFI said that the electronics sector has been severely affected by the city lockdowns.
Many Taiwanese electronic components makers have built clusters of production sites in Hubei and Guangdong provinces, the two regions hit the hardest by the COVID-19 outbreak, and city lockdowns to restrict movement are the last thing tech companies want, the industry group said.
Hubei’s capital, Wuhan, the center of the outbreak, and neighboring Xiantao and Huangshi have become a production hub for many Taiwanese printed circuit board makers, but these cities have been sealed off and raw material shipments interrupted, the group said.
Even when manufacturers secure approval from local governments to resume production, workers have to stay in quarantine for 14 days before starting production line duty, which has slowed output, it said.
As for the biotech industry, many drug manufacturers in Taiwan are expected to soon face raw material supply shortages from China as their inventories run out, CNFI said.
The outbreak has also hurt private consumption in China, which would affect Taiwanese makers of consumer electronics items, such as chip and optoelectronic products, it said.
Under such unfavorable circumstances, some small and medium-sized enterprises in Taiwan are expected to face capital shortfalls as their operations deteriorate, it said.
Those organizations would still have to pay salaries, rents and loan interest, so their financial burden would be heavier until production returns to normal, the group said.
Many businesses are hoping the government would help them negotiate with banks to resolve possible funding issues, it added.
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