Sixteen Malaysian companies told their industry association they would spend more than RM4 billion over the next two years. That survey result, reported by The Star on September 8, 2021 in a Bernama story, shows how hard the country was working to dig out of a chip backlog that had been building for twelve months.
The trouble started with COVID-19 lockdowns. Factories in Malaysia and elsewhere shut down or ran at a fraction of normal output, and the shortage, mostly of integrated circuits, got worse as other shocks piled on. Fires and drought hit fabrication plants in Japan, the United States and Taiwan. In March, the container ship Ever Given wedged sideways in the Suez Canal and blocked one of the world’s busiest trade routes for almost a week.
Malaysia matters here because of what it does in the chain. It sits among the top ten countries in semiconductors, with about seven per cent of global trade and about 13 per cent of global capacity in back-end assembly, test and packaging. The industry employs over 575,000 people and contributes 6.8 per cent of gross domestic product.
Back to full capacity, with a condition
The government let factories return to 100 per cent capacity once 80 per cent of their staff were fully vaccinated. Datuk Seri Wong Siew Hai, president of the Malaysia Semiconductor Industry Association, said that eased some of the pressure on customer orders. He thanked officials for treating electrical and electronics as an essential sector. “We are working around the clock to ship as many products as possible,” he told Bernama.
He also saw more employers getting workers vaccinated, and the association’s survey pointed to firms hiring and investing to lift productivity because orders were running high. Beyond the RM4 billion, the 16 companies planned to add 3.4 million square feet of built-up space and create about 4,600 jobs.
One company that was spared
Not everyone felt the squeeze equally. Manuel Zarauza, group managing director of Malaysian Pacific Industries Bhd, said the company was not facing a major chip shortage, because suppliers had put it first after a relationship of more than 20 years. He warned, though, that a long shortage would eventually hit the whole industry, and said the group expected strong demand from automotive, 5G, data centres and the Internet of Things.
Zarauza also cited Semiconductor Industry Association figures showing the industry grew 8.3 per cent quarter on quarter in the second quarter of 2021 and 29.2 per cent year on year. The year-on-year jump looks big, he noted, partly because the second quarter of 2020 had been such a slump.
