COVID-19 Hits Malay Factory... Semiconductor Supply Shortage Worsens

Largest Semiconductor Equipment Company Unisem Suspends Factory Operations Due to COVID-19

(Photo by Reuters)

[Asia Economy Reporter Yujin Cho] Malaysia's largest semiconductor equipment company, Unisem, has experienced multiple COVID-19 cases and deaths, causing its production lines to halt. Amid a global semiconductor supply shortage that has disrupted vehicle production at major automakers, concerns are growing that this shutdown will further worsen the situation.

According to the Wall Street Journal (WSJ) on the 8th (local time), Unisem announced that it will close some of its factories until the 15th due to the occurrence of COVID-19 cases and deaths. Unisem is a semiconductor equipment company like Infineon and STMicroelectronics.

Unisem stated, "As the operation of our factories, which constitute a key part of the semiconductor supply chain, has been suspended, our customers are facing significant difficulties," and added that it will accelerate vaccination among employees to expedite normalization.

With workforce operations minimized due to this situation, the damage is expected to be prolonged. Unisem added, "We have decided to operate factory personnel on a limited basis until the COVID-19 situation stabilizes," and expects the negative impact to continue for at least several months.

WSJ reported that amid the global semiconductor shortage causing disruptions for major automakers, Unisem's shutdown has led to a new crisis.

Even before the Malaysian factory shutdown, automakers that had already taken additional production cuts due to semiconductor chip shortages are facing a "double whammy."

Earlier, U.S. General Motors (GM) decided to reduce production at eight plants in the U.S., Canada, and Mexico last month due to semiconductor shortages, and Ford also decided to reduce production of some models, including the popular F-150 pickup truck.

Japanese automaker Toyota has also suspended production lines at key plants such as Takaoka in Toyota City, Aichi Prefecture, for several weeks starting earlier this month.

The industry expects the semiconductor shortage to continue causing damage through 2023. Gunnar Herrmann, Chairman of Ford's European Board, warned in an interview with CNBC at the Munich Motor Show in Germany yesterday that the semiconductor shortage could persist until 2023.

Ola K?llenius, CEO of Germany's Daimler, also expressed concern, saying, "(The semiconductor crisis) will hit hardest in the third quarter," and added, "We hope recovery will begin in the fourth quarter, but uncertainties remain in restoring production systems."

CEO K?llenius predicted, "Structural issues in semiconductor demand and supply will impact until next year and may only ease in 2023."

This content was produced with the assistance of AI translation services.