King Yuan Electronics, the key Taiwanese semiconductor manufacturer and Apple supplier, shut down two production sites because of the sudden increase in COVID-19 cases. This move may aggravate the supply shortage.
King Yuan Electronics Stops Production
King Yuan Electronics has confirmed that 77 employees have tested positive for the coronavirus at its Miaoli manufacturing site. The company has since shut down production. This new infection cluster has forced the government to test all of the workers in Miaoli, Taoyuan, and Hsinchu.
Nikkei Asia reported that King Yuan Electronics will suspend all domestic production for two days starting June 2. The suspension of production in Hsinchu and Miaoli could affect the global chip industry as chip shortages continue.
King Yuan spokesperson Aaron Chang said that the production is halted until June 6 to give them enough time to thoroughly clean and disinfect the entire working environment.
The move is to address the growing concerns from the employees and clients about their safety of coming into the offices and the production facilities. They are hoping that production can be fully restored after the move.
King Yuan Electronics predicts that production will be impacted for June, reducing revenue and output by 6%. The company will attempt to recover lost time by running production runs after manufacturing resumes.
The danger of COVID-19 induced shutdown has other manufacturers concerned. Health authorities stated that Greatek Electronics also had a series of infections, forcing the company to test all of its 4,000 employees.
Taiwan now sits at COVID-19 warning level 3, one level before complete lockdown. The Health Ministry says the plan to reduce the warning level on June 14 has been changed because of increased case counts.
Since May 11, Taiwan has had more than 8,000 coronavirus cases, with 187 recorded deaths. The threat of lockdown and increased cases have not affected production at other chipset manufacturers in the country.
An Apple supplier stated that if the majority of the population of Taiwan won't get vaccinated soon, it is only a matter of time until more companies will be forced to stop production due to the virus.
Global Chip Shortage
The Straits Times has reported that the demand for semiconductor chips continues to outstrip supply, and car manufacturers are no longer the only ones affected.
The global chip shortage is expected to last until 2022, and it has now extended to the tech industry, according to Bain & Company.
The car industry had pulled backorders in the wake of the COVID-19 pandemic while other industries were increasing orders. As a result, capacity slots were transferred to higher-margin industries.
Since April, the effects of the global chip shortage have caught up with the tech industry. Consumer electronics account for 70% of the semiconductor market, while the automotive industry accounts for only 10%.
Tech companies are encouraged to start making structural changes to their supply chains. This includes taking a new approach to collaborative supply planning.
This can be done through designing a flexible ecosystem of partners and suppliers and enhancing supply chain collaboration to share risks and coordinate inventory and capacity buffers.
Related Article : Global Chip Shortage to Persist Until 2023--Demands for PC to Slightly 'Soften' in the Next Years
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Written by Sophie Webster
