The number of COVID-19 infections in Malaysia is threatening to aggravate shortages of semiconductors and other components that have hammered automakers for months.
The Southeast Asian nation has not historically had the kind of importance to technology supply chains that Taiwan, South Korea or Japan do, but Malaysia has emerged as a major center for chip testing and packaging, with Infineon Technologies AG, NXP Semiconductors NV and STMicroelectronics NV among the key suppliers operating plants there.
Now COVID-19 infections are soaring in the nation, jeopardizing plans to lift lockdowns and restore full production capacity.
Photo: Reuters
Ford Motor Co last week said that it would temporarily suspend production of its popular F-150 pickup truck at one US plant because of “a semiconductor-related part shortage as a result of the COVID-19 pandemic in Malaysia.”
The Malaysian government is racing to address the outbreak and has granted exemptions to certain manufacturers in an effort to keep the economy on track. Companies were allowed to keep operating with 60 percent of their workforces during June lockdowns and they are able to move back to 100 percent when more than 80 percent of their workers are fully vaccinated.
On Monday, the number of daily reported infections dropped to 17,672, but the situation on the ground remains volatile. Factories have to shut down completely for as long as two weeks for sanitation if more than three workers contract COVID-19 under unofficial guidelines and the Delta variant of SARS-CoV-2 is proving particularly infectious and difficult to stop.
“This could be very disruptive for Infineon and other companies that have plants of a few thousand workers,” Kuala Lumpur-based Kenanga Investment Bank Bhd semiconductor analyst Samuel Tan said.
Local firms are reporting such closures through exchange filings. STMicro and Infineon, both key auto suppliers, have had to close facilities.
The situation could aggravate semiconductor shortages already at crisis levels.
Chip lead times, the gap between ordering a semiconductor and taking delivery, increased by more than eight days to 20.2 weeks last month from June, research by the Susquehanna Financial Group showed.
That gap was already the longest wait time since the firm began tracking the data in 2017.
Automakers have lost sales after a series of unexpected blows in the past year, including a cold snap in Texas that hobbled factories and a fire in Japan at a critical auto chip plant.
Toyota Motor Corp last week said that it would suspend production at 14 plants because suppliers, particularly in Southeast Asia, have been hit by COVID-19 infections and lockdowns. It has partners clustered in Thailand, Vietnam and Malaysia.
Thailand and Vietnam are also seeing sharp increases in reported infections.
Malaysia’s position as a prime base for testing and packaging chips is critical because those are the last steps of semiconductor production. Electronics and electrical products account for 39 percent of the nation’s exports, according to Malaysian Ministry of International Trade and Industry data.
“Malaysia is a key player in the global semiconductor trade,” Malaysia Semiconductor Industry Association president Wong Siew Hai said. “Thus, any disruption anywhere along the supply chain will have knock-on effects elsewhere in the ecosystem.”
DIVIDED VIEWS: Although the Fed agreed on holding rates steady, some officials see no rate cuts for this year, while 10 policymakers foresee two or more cuts There are a lot of unknowns about the outlook for the economy and interest rates, but US Federal Reserve Chair Jerome Powell signaled at least one thing seems certain: Higher prices are coming. Fed policymakers voted unanimously to hold interest rates steady at a range of 4.25 percent to 4.50 percent for a fourth straight meeting on Wednesday, as they await clarity on whether tariffs would leave a one-time or more lasting mark on inflation. Powell said it is still unclear how much of the bill would fall on the shoulders of consumers, but he expects to learn more about tariffs
NOT JUSTIFIED: The bank’s governor said there would only be a rate cut if inflation falls below 1.5% and economic conditions deteriorate, which have not been detected The central bank yesterday kept its key interest rates unchanged for a fifth consecutive quarter, aligning with market expectations, while slightly lowering its inflation outlook amid signs of cooling price pressures. The move came after the US Federal Reserve held rates steady overnight, despite pressure from US President Donald Trump to cut borrowing costs. Central bank board members unanimously voted to maintain the discount rate at 2 percent, the secured loan rate at 2.375 percent and the overnight lending rate at 4.25 percent. “We consider the policy decision appropriate, although it suggests tightening leaning after factoring in slackening inflation and stable GDP growth,”
Meta Platforms Inc offered US$100 million bonuses to OpenAI employees in an unsuccessful bid to poach the ChatGPT maker’s talent and strengthen its own generative artificial intelligence (AI) teams, OpenAI CEO Sam Altman has said. Facebook’s parent company — a competitor of OpenAI — also offered “giant” annual salaries exceeding US$100 million to OpenAI staffers, Altman said in an interview on the Uncapped with Jack Altman podcast released on Tuesday. “It is crazy,” Sam Altman told his brother Jack in the interview. “I’m really happy that at least so far none of our best people have decided to take them
As they zigzagged from one machine to another in the searing African sun, the workers were covered in black soot. However, the charcoal they were making is known as “green,” and backers hope it can save impoverished Chad from rampant deforestation. Chad, a vast, landlocked country of 19 million people perched at the crossroads of north and central Africa, is steadily turning to desert. It has lost more than 90 percent of its forest cover since the 1970s, hit by climate change and overexploitation of trees for household uses such as cooking, officials say. “Green charcoal” aims to protect what