Taiwan’s Covid-19 outbreak spreads to chip companies

The spread of Covid-19 in electronics factories in Taiwan threatens to delay shipments of semiconductors, according to companies and analysts, raising the possibility of renewed disruption in an industry dominated by global shortages.

The country, which is seen as a mainstay in the global chip supply chain, suffers from this The first major outbreak of the Corona virus. It came against the background Escalation of warnings About the depth of the semiconductor shortage that has afflicted everything from automobiles to consumer electronics.

King Yuan Electronics, a chip and packaging testing company, said Monday that it expects an outbreak among its workers to cut its June production and revenue by as much as 35 percent. Of the 7,300 employees of KYEC, 238 have been confirmed to have the Covid-19 virus.

The outbreak among migrant workers in Taiwan has also hit chip packaging company Gretech, telecom equipment maker Acton and Foxconn, Apple’s semiconductor equipment maker Foxconn.

Taiwan reported 214 new cases of COVID-19 on Tuesday, of which 211 have spread locally and 26 deaths. The country has recorded more than 11,000 cases and 260 deaths since the start of the epidemic.

KYEC and Foxsemicon have closed one plant for two days for disinfection, and the four companies are testing their entire workforce, a task expected to identify more infections.

“The supply market is already under huge pressure, we already have a four-month lead-time from order-to-delivery for Taiwan chips, so any further reduction in supply capacity will exacerbate the shortage as it is now,” said Olaf Schattmann, one of the suppliers. Chain Expert at Bain Consulting.

KYEC and its ilk of testing and packaging chips produced by contracted manufacturers such as Taiwan Semiconductor Manufacturing Corporation. These are the last steps in the complex manufacturing process before the chips are shipped to the companies that designed them.

Among KYEC’s clients is MediaTek, one of the world’s largest chip design houses, which sells semiconductors for electronic devices from smartphones to TVs.

Analysts said there are few options for KYEC and Greatek customers to protect themselves from delivery delays as other testing and packaging companies, such as industry-leading Advanced Semiconductor Engineering, operate at full capacity.

Mark Lee, chip analyst at Bernstein, said the disruption was likely to be short-lived. “I think it will mostly hit small chip design houses as it will prioritize large customers,” he said, adding that MediaTek reiterated its revenue target for the second quarter despite problems at KYEC.

The risk of infection disrupting production in the rest of the chip supply chain is much lower because these stages are less labor intensive than packaging, allowing companies like TSMC and MediaTek to implement socially distancing working arrangements.

But analysts said it was not clear whether the measures taken by Taiwan’s health authorities would be enough to stop the spread of COVID-19 in electronics factories.

According to Taiwan’s Central Epidemic Command Center, migrant workers from the affected factories were staying in the same dormitories.

“The same thing happened in Singapore“I don’t know if there are lessons to be learned,” said Patrick Chen, head of Taiwan research at CLSA, a brokerage. “They need to improve the living conditions of migrant workers.”

Taiwan has 713,000 migrant workers, according to government statistics, as well as at least 50,000 undocumented workers. Approximately 470,000 work in the industrial sectors, many of whom live in dormitories within or nearby factory buildings.

Employers, who are required by law to provide accommodation and food for migrant workers, often outsource these services to brokers who crowd large numbers of workers into common rooms.

While the government has set up rapid testing stations at key technology industry parks and quarantines those who have tested positive, health authorities are struggling to improve cramped living conditions for migrant workers who have not tested positive for the virus.

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