Taiwan: Malaysia’s Help Needed to Ease Global Chip Shortage

Taiwan Economy Minister

Taiwan Economy Minister said, Taiwan alone could not sort out the shortage of autochip problem because the supply chain is so complex.

Global Automotive Industry Faces Severe Chip Shortage 

In a recent interview with Reuters, Taiwan’s Economy Minister Wang Mei-hua has ramped up the pressure on Malaysia to resume and reach previous production capacity of autochips in order to combat the global shortage of auto semiconductors which as a result has meant that truck manufacturers have had to either slow or temporarily halt production at their factories.

Toyota, Ford, Volvo, Daimler are struggling to deal with the impact of the shortage, while Traton Group has sold less units due to an ongoing shortage of semiconductors and other  key bought-in parts. Company officials expect the situation to continue into 2022.

According to a recent article in Business Insider, the Volkswagen trucking department is taking parts from finished but unsold vehicles and using them in trucks with waiting customers. This has reflected how severe the chip crisis is that is being faced in automotive production.

As of today, Malaysia accounts for 13 per cent of global chip packaging and testing, and 7 per cent of the world’s semiconductor trade passes through Malaysia, with some value added at local factories and chips getting combined with other parts before final shipment. With the growing importance of Malaysia in the technology supply chain, it doesn’t come as a surprise that the Traton Group has been one of the first to notice the worsening impact that the Covid-19 outbreak in Malaysia has had on chip production as reported by Business Insider.

Quoting an industry executive in August, another recent publication in Reuters suggested that “the surge in Covid-19 cases has resulted in global demand for chips from Malaysia outstripping supply at a time when car and truck firms and makers of phones and medical equipment are ramping up their output”.

Bloomberg has additionally reported that although the Southeast Asian country hasn’t historically had the kind of importance to technology supply chains that Taiwan, South Korea or Japan do, it explained that Malaysia has emerged as a major centre for chip testing and packaging in recent years, with Infineon Technologies AG, NXP Semiconductors NV and STMicroelectronics NV amongst the key suppliers having their operating plants in the country. According to data from the Ministry of Trade and Industry, electronics and electrical products account for 39 per cent of the country’s total exports.

Returning to Taiwan and Wang Mei-hua’s interview with Reuters, the Economy Minister commented that Taiwan alone could not sort out the problem because the supply chain is so complex.

Taiwan, as a major chip producer, has been front and centre of efforts to resolve the shortage, which has idled auto plants around the world.

“The bottleneck in fact is in South-East Asia, especially Malaysia, because for a while the factories were all shut down,” she said.

The problem was especially acute with auto chip packaging, with companies in Malaysia providing services not offered by Taiwanese firms, Wang added.

“Now the focus is on Malaysia resuming production as soon as possible. I know that Malaysia started to restore production capacity in early September, and now the production capacity has returned to about 80 per cent, so if their capacity can slowly come back, this problem can be slowly dealt with.”

About the author

Mary has over 20 years experience as the editor of our Malaysian sister magazine, The Tyreman. Based in Kuala Lumpur, she writes articles for us on the Malaysian and other South East Asian markets.

Phone: (60) 3 7781 1323

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