Malaysia’s help needed to ease global chip shortage, Taiwan says

Some 7 per cent of the world's semiconductor trade passes through Malaysia.
Some 7 per cent of the world's semiconductor trade passes through Malaysia.PHOTO: CRISTIANIS/PIXABAY

TAIPEI (REUTERS) - Malaysia’s help is needed to resolve the global shortage of auto semiconductors, especially when it comes to packaging, a sector affected by the country's Covid-19 curbs, Taiwan Economy Minister Wang Mei-hua said.

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.

Speaking in an interview late on Thursday (Sept 30) at her ministry, Ms Wang told Reuters that Taiwan alone could not sort out the problem because the supply chain is so complex.

"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, Ms 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."

Malaysia is home to suppliers and factories serving semiconductor makers such as Europe's STMicroelectronics and Infineon, as well as major carmakers including Toyota and Ford.

Malaysia Semiconductor Industry Association President Wong Siew Hai said that the major Malaysian semiconductor manufacturers are already running at full capacity to supply the auto industry.

"For the automotive chips, they are doing their best to ship as much as possible, but the current capacity cannot meet demand because it's too huge, the build-up is a lot," he said.

"Everything is at 100 per cent to satisfy the demand for automotive parts. Where they can increase productivity, they're already doing so." 

Adding capacity will take time, with most available only next year, Mr Wong said.

The country 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.

Global demand for chips from Malaysia is still outstripping supply after a surge in Covid-19 cases disrupted production at a time when car firms and makers of phones and medical equipment are ramping up their output, an industry executive said in August.

The White House pressed automakers, chip companies and others last month to provide information on the semiconductor crisis.

Speaking to reporters on Friday, Ms Wang reiterated the United States was not targeting Taiwanese firms, while Washington had assured Taipei that no sensitive information would be leaked.

If firms need help, the government will provide it, she added.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s largest contract chipmaker, said it would tell the government if any help was required.