Giant Manufacturing Co (巨大機械) is waiting as long as two years for bicycle parts as unprecedented disruptions and lockdowns roil the global supply chain, putting one of the world’s biggest bike makers at risk of missing out on a demand boom.
“It is a hell of job,” Giant chairperson Bonnie Tu (杜綉珍) said in an interview at the company’s Taichung headquarters.
Some bicycle parts have a lead time of two years and even simple components can take six months, she said. That compares with a normal wait time of one to two months.
Photo: Cheng I-hwa, Bloomberg
The global supply chain has been plagued by chaos for more than two years, as sudden shortages, shipping delays and soaring prices hit everything from masks to vehicles and iPhones. Russia’s invasion of Ukraine and China’s hard-line approach to stamping out its worst COVID-19 outbreak in two years has further exacerbated the problems, boosting the risk of a global recession.
Giant has temporarily shut four plants in Kunshan, which borders Shanghai, to comply with local lockdown measures.
The restrictions have also meant components cannot be brought in, Tu said.
The company has five manufacturing centers in China, which account for about 3.5 million bikes — more than half its total capacity.
The disruption has underscored the importance of diversifying sourcing and production locations.
“We understand we can’t put all our eggs in one basket,” Tu said, and Giant is joining many other manufacturers in shifting to producing more goods locally.
The company also has one plant in Taiwan, the Netherlands and Hungary. Giant plans to start production at its new factory in Vietnam by the end of the year, benefiting from the country’s free-trade agreement with the EU, which accounts for almost 40 percent of Giant’s sales.
Competitors have shifted their supply chains away from China to Cambodia, which has zero export duties on goods sent to the US, Tu said.
There are tentative signs that the worst of the supply crunch is easing. Bike inventory has rebounded to about four weeks of demand from almost zero last year, although it is still lower than the normal level of eight weeks, Tu said.
High-end bicycles face the worst shortages of parts, but Tu predicted that is likely to ease by the end of this year.
Some components, like the Shimano Inc derailleur set that is a core part of a bike’s gear mechanism, might still be in short supply into next year.
Tu estimated that Giant would post a high-single digit to low-teens revenue growth this year, after reporting a record NT$81.8 billion (US$2.81 billion) in sales last year, in part due to rising demand for electric bikes.
The sector might account for 40 percent of Giant’s total sales in three years, compared with 31 percent last year.
Still, Tu warned that the company’s outlook would depend on supply conditions, particularly in China.
“No one knows what the China government will do” with its zero COVID-19 policy, Tu said, adding that measures to allow workers to live at factories during lockdown periods would help ease disruptions.
NXP Semiconductors NV expects its first automotive-grade 5-nanometer chip built by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to become available for automakers within one-and-a-half years at the earliest, following demand for better computing performance and energy efficiency for connected vehicles, a company executive said yesterday. That would mean a significant upgrade from the 16-nanometer technology NXP adopted in its existing series of microprocessors. NXP chief technology executive Lars Reger made the remarks during a media briefing yesterday in Taipei. The latest updates came after NXP unveiled its plan to source 5-nanometer capacity from TSMC in 2021. This is Reger’s first trip to
EVADING US CONTROLS? ‘These surveillance chips are relatively easy to manufacture compared to smartphone processors,’ a source said about HiSilicon’s components A Huawei Technologies Co (華為) unit is shipping new Chinese-made chips for surveillance cameras in a fresh sign that the Chinese tech giant is finding ways around four years of US export controls, two sources briefed on the unit’s efforts said. The shipments to surveillance camera manufacturers from the company’s chip design unit, HiSilicon Technologies Co (海思半導體), started this year, said one of the sources and a third source familiar with the industry supply chain. One of the sources briefed on the unit said that at least some of the customers were Chinese. Huawei unveiled new smartphones in the past few weeks that
CENTRAL BANK: The consumer price index would grow while core CPI is set to move forward at a milder rate, the governor said, adding that the GDP forecast is down The central bank yesterday kept its policy rate unchanged for the second straight quarter, saying that a rate pause would help support the economy, as consumer prices have moderated and would return to the 2 percent target next year. “The board gave unanimous support to a policy hold, although some members voiced concern over lingering inflationary pressures and called for close monitoring,” central bank Governor Yang Chin-long (楊金龍) told a media briefing after its quarterly board meeting. The consumer price index (CPI) would grow 1.83 percent next year, while core CPI after stripping out volatile items would advance a milder 1.73 percent,
SLUMP: The electronics, machinery and traditional industries posted the largest decline in the past year; overall, sectors showed gains over the previous month Taiwan’s industrial production index decreased 10.53 percent year-on-year to 91.38 last month, falling for a 15th consecutive month on an annual basis, as weak global economic growth continued to weigh on end-market demand and investment momentum, the Ministry of Economic Affairs said on Saturday. The industrial production index gauges output in Taiwan’s four main industries: manufacturing, electricity and gas supply, water supply, and mining and quarrying. Last month’s decline was the smallest contraction since March when the index dropped 16.03 percent from a year earlier. On a monthly basis, the index rose 7.28 percent, marking a second straight month of improvement,
RSS