The closure of the runaway chip factory in Malaysia has spread to Bosch, Nissan and so on.

According to Xu Daquan, executive vice president of Bosch (China) Investment Co., Ltd., due to the serious epidemic in Malaysia, a semiconductor chip supplier's Malaysian Muar factory closed down a few weeks ago and was again asked by the local government to close part of the production line until August 21, which will directly affect Bosch ESP/IPB, VCU, TCU and other chips, and is expected to be basically cut off in August.

This is not the first time that the auto industry has warned of the severe epidemic situation in Malaysia. Last week, foreign media reported that Nissan temporarily shut down production lines at its large assembly plant in Smyrna, Tennessee, until the end of the month due to the COVID-19 outbreak at a chip supplier in Malaysia. Nissan North America did not name its suppliers, but said the plant would stop production during the week of Aug. 16 and Aug. 23 and now plans to restart production on Aug. 30.

At present, Malaysia is facing the most severe situation since the outbreak of novel coronavirus. Although the vaccination rate of novel coronavirus vaccine in Malaysia is at a high level among Southeast Asian countries, it is not enough to control the epidemic rapidly. on the contrary, the Delta strain spreads rapidly, which brings great challenges to the prevention and control of the epidemic. This has forced Malaysia to impose blockades several times, affecting local semiconductor manufacturers.

According to public data, Malaysia, as a closed test production center in the global semiconductor supply chain, currently has more than 50 semiconductor factories set up locally, including Intel, Infineon, Italian and French Semiconductor, NXP, Texas Instruments, on Semiconductor and other international semiconductor giants, and the local closed test capacity accounts for about 13% of the global closed test capacity. Due to the recurrence of the epidemic, semiconductors, as a key local technology supply chain, have also been seriously affected, and many semiconductor enterprises have encountered the plight of shutdown.

Photo source: Infineon

For example, Infineon, it is reported that there are three factories in Malaysia. In June this year, the Malaysian government announced the implementation of a "comprehensive action control order" nationwide from June 1 to June 14, and Infineon's local factories were also forced to be temporarily closed. Although the plant has resumed operation, it is reported that Infineon will still face losses of up to tens of millions of euros.

Although Infineon CEO Reinhard Pross has previously said that he is doing his best to solve the problems encountered throughout the supply chain, there is no denying that it is very difficult to implement. At present, local semiconductor enterprises in Malaysia are facing not only the problem of shutdown simply because of the epidemic, but also, more seriously, the lives of employees in some enterprises have been threatened by the epidemic.

According to previous news, some employees of Infineon's Kulim wafer manufacturing and testing plant in Malaysia have been infected with novel coronavirus, and Infineon's Malaysian production partners will also be affected by the novel coronavirus epidemic. The situation at the Muar factory, the semiconductor chip supplier mentioned above, is even more serious, with more than 3000 employees reported to have been infected and more than 20 killed as a result of the disease.

What is also noteworthy is that Malaysian Prime Minister Muhitin announced a few days ago that he had submitted his resignation to the Supreme head of State Abdullah and resigned as prime minister. With Muhiding's resignation, it will undoubtedly make Malaysia's already uncertain epidemic prevention situation more difficult, thus adding more uncertainties to the resumption of work and production of local semiconductor companies in Malaysia, further aggravating the global chip shortage.

Previously, the industry agreed that the second quarter will be the most tight time of chip supply, now it seems that this conclusion is still too optimistic. Due to the recurrence of overseas epidemics, the delivery time of the chip is still being extended. According to the latest research by Hainer International Group, the chip delivery cycle (the time difference between ordering semiconductors and delivery) increased by more than eight days in July from June to 20.2 weeks. This is the longest waiting time since the company began tracking the relevant data in 2017.

The automotive industry has suffered huge capacity losses because of the shortage of chips. According to the data of AutoForecast Solutions, as of August 9, the global automobile production loss caused by chip shortage has reached 5.853 million, of which North America and Europe have the largest loss, with 1.874 million and 1.746 million vehicles respectively, followed by China, with 1.122 million vehicles. AutoForecast Solutions predicts that the final loss of global car production for the whole year could rise further to 7 million vehicles.

The Global Automotive Research Institute also believes that the global automobile production reduction caused by lack of cores in 2021 is expected to exceed 7 million, of which the domestic market production reduction is forecast to be between 100 and 1.5 million. In the next Q3, the chip shortage is expected to be more serious than Q2 as mainframe manufacturers plan to make up for the production gap of H1 in the second half of the year, or intensify panic additional orders and vicious competition. And because of repeated outbreaks in Malaysia, Southeast Asia and other key regions, increasing the gap between chip supply and demand, there will still be many uncertainties in chip supply in 2021 and the first half of 2022.

"because at this stage, the relief of core shortage mainly depends on the adjustment of production capacity allocation of TSMC, Renesas, NXP and other leading enterprises. However, at present, the epidemic situation of novel coronavirus, the chip sealing and testing country in Southeast Asia, represented by Malaysia, continues to ferment, the closed testing of many head enterprises and the closure of some wafer factories, the production capacity remains limited, and the production capacity of 8-inch wafers and automotive chips cannot be expanded in the short term. According to the OEM production line investment production forecast, the next stage of 8-inch wafer production capacity will be released after 2022. " Analysts at the Global Automotive Research Institute further explained.

This means that the lack of core will continue to affect the normal operation of the automobile industry for some time in the future, and will last until 2022. In fact, Infineon and NXP, the world's two largest automotive chip makers, have admitted that the supply and demand of chips will not be balanced until the middle of next year. A few days ago, Sun and Moon, which provides closed testing services for chip manufacturers, also believes that the chip shortage will continue in 2022, and the tight supply of chips will still be a challenge for many industries.