Sixteen Malaysian chip companies say they will put more than RM4 billion into new spending over the next two years. The plans, from a survey by the Malaysia Semiconductor Industry Association (MSIA), include 3.4 million square feet of added factory space and about 4,600 new jobs.
The money is a response to a backlog. Lockdowns during the past 12 months forced many factories in Malaysia and elsewhere to close or run at reduced capacity, and orders for integrated circuits piled up. Other trouble made it worse: fires and drought hit fabrication plants in Japan, the United States and Taiwan, and in March a container ship wedged sideways in the Suez Canal and blocked one of the world’s busiest trade routes for almost a week.
MSIA president Datuk Seri Wong Siew Hai said Malaysia’s place in the global supply chain makes expansion urgent given the severe shortage of chips. He told Bernama that the government’s decision to let factories return to full capacity once 80% of staff are fully vaccinated has eased some of the pressure. “We thank the government for understanding that electric and electronics (E&E) is one of the essential service sectors, and with the latest announcement, we are working around the clock to ship as many products as possible,” he said.
More companies are vaccinating workers, Wong added, and some are hiring to lift output because orders are high.
Demand keeps climbing
Industry research projects global demand for ICs to rise 20% this year and another 10% in 2022. The industry group Semi reported that worldwide semiconductor equipment billings jumped 48% from a year earlier to a record US$24.9 billion in the second quarter of 2021, up 5% on the previous quarter.
Manuel Zarauza, group managing director of Malaysian Pacific Industries Bhd (MPI), expects the shortage to run into 2022. He cited Semiconductor Industry Association figures showing industry growth of 8.3% over the previous quarter and 29.2% year on year in the second quarter. The yearly jump is so large, he said, “because there was a big slump in Q2’20 due to the Covid-19 pandemic.”
MPI itself is in better shape than most. Its suppliers have put it first because of a relationship that goes back more than 20 years, Zarauza said, so it is not facing a major shortage now. It expects strong results in coming quarters, helped by automotive, 5G rollout, data centres and the Internet of Things. “If the chip shortage continues over a long period of time, the entire industry will be impacted,” he added.
Malaysia’s weight in the industry
Malaysia ranks among the top ten semiconductor countries. It handles about 7% of global trade in chips and about 13% of the world’s back-end assembly, test and packaging capacity. The wider industry spans electronics manufacturing services, automation, precision engineering, and medical devices and GPS equipment that use electronics. It accounts for 6.8% of national GDP and employs over 575,000 people.
The global market for outsourced semiconductor assembly and test is projected to grow from US$32.5 billion in 2020 to US$45.2 billion by 2026, a compound annual rate of over 5.7%.
Sources
Sources
- Malaysia to increase efforts to address semiconductor backlog …
- MALAYSIA TO INCREASE EFFORTS TO ADDRESS … – BERNAMA
