Taiwan’s Covid-19 fire spreads to chip companies

The spread of Covid-19 in Taiwan’s electronics factories threatens to delay semiconductor shipments, according to companies and analysts, increasing the prospect of renewing the disruption of an industry facing a global shortage.

The country, considered a key player in the global chip supply chain, is suffering first major coronavirus outbreak. It came in a context of warnings scaling about the depth of the lack of semiconductors, which has affected everything from cars to consumer electronics.

King Yuan Electronics, a chip testing and packaging company, said Monday it expected a fire among its workers to reduce its production and revenue revenues by up to 35%. Of the 7,300 KYEC employees, 238 are confirmed to have been infected with Covid-19.

A fire among migrant workers in Taiwan has also hit chip maker Greatek, a telecommunications equipment maker Accton, and Foxsemicon, a semiconductor equipment maker affiliated with supplier Apple Foxconn.

Taiwan on Tuesday reported 214 new Covid-19 cases, 211 of which were spread locally, and 26 dead. The country has recorded more than 11,000 cases and 260 deaths since the beginning of the pandemic.

KYEC and Foxsemicon have each closed a factory for two days for disinfection, and the four companies are testing their entire workforce, a company that plans to identify more infections.

“The supply market is already under enormous pressure, we have already had four months of expiration from order to delivery for Taiwanese chips, so any further reduction in supply capacity will exacerbate the shortage in the their status, ”said Olaf Schatteman, an experienced chain supplier in Bain, the consultancy.

KYEC and its type tests and package chips produced by contract manufacturers such as Taiwan Semiconductor Manufacturing Company. These are the final steps in a complex manufacturing process before the chips are shipped to the companies that designed them.

Among KYEC’s customers is MediaTek, one of the largest chip makers in the world, which sells semiconductors for electronic gadgets from smartphones to televisions.

Analysts said there were few options for KYEC and Greatek customers to protect themselves from delivery delays as other test and packaging companies, such as the global leader in Advanced Semiconductor Engineering, were already in full capacity.

Mark Li, a chip analyst at Bernstein, said the disruption is going to be short-lived. “My guess is that it will make for most small chip design houses since priority will be given to large customers,” he said, adding that MediaTek had repeated its turnover target for the second quarter despite the problems in KYEC.

The risk of infections disrupting production in the rest of the chip supply chain is considered much lower because those stages are significantly less labor intensive than packaging, allowing companies such as TSMC and MediaTek to implement agreements. socially distant work.

But analysts said it was unclear whether the measures taken by Taiwan’s health authorities were enough to stop the spread of Covid-19 in electronics factories.

According to the Taiwan Central Epidemic Command Center, migrant workers of the affected plants were staying in the same dormitories.

“The same thing happened in Singapore, and I don’t know if maybe there are lessons to be learned, “said Patrick Chen, head of Taiwan Research at CLSA, an intermediary.” They need to improve living conditions for migrant workers. ”

Taiwan has 713,000 migrant workers, according to government statistics, and at least 50,000 undocumented. Nearly 470,000 work in industrial sectors, with many living in dormitories in factory locations or nearby.

Employers, who are required by law to provide migrant workers with accommodation and food, outsource for the most part these services to brokers who employ a large number of workers in common rooms.

While the government has set up rapid test stations in major technology industry parks and quarantined those that test positive, health authorities are struggling to improve strict living conditions for migrant workers who have not tested positive. .

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