Malaysia to increase efforts to address semiconductor backlog orders

KUALA LUMPUR: Malaysia is trying its best to reduce the backlog of orders in the semiconductor industry over the past 12 months following the implementation of a lockdown to prevent 19 epidemics.

Lockdown saw many sectors and companies suspending their operations or operating at limited capacity. This has not just hit Malaysia but the whole world is suffering from it.

Shortages – consisting primarily of components of integrated circuits (ICs) – have also been complicated by developments worldwide over time that have limited supply flows.

This includes fabricated factories in Japan, the United States and Taiwan, as well as fires and droughts incidents. Also adding Suez Canal incident in March this year. When the container ship Evergreen closed horizontally and disturb traffic flowed. It affected the busiest and important trade route for a week.

Important for capacity building:

Datuk Seri Wong Siew Hai, president of the Malaysia Semiconductor Industry Association (MSIA), said that since Malaysia plays a key role in the global semiconductor supply chain. It is necessary to increase capacity in light of the severe global shortage of ICs.

He noted that the government has allowed factories to resume operations at 100% capacity when 80% of employees have been fully vaccinated, which helped reducing some of the pressure on consumers to comply with orders.

“We thank the government for recognizing that electricity and electronics (E&E) is an essential service sector, and with the latest announcement, we are working around the clock to deliver more products.

“We also see that more companies are vaccinating their employees, and based on our survey, some companies are investing more and hiring more workers to increase their productivity, as orders are quite high.”

According to the survey, 16 companies said they would invest more than Rs. 4 billion over the next two years, increase their built-up area to 3.4 million square feet, and create about 4,400 new jobs.

Meanwhile, industry research has shown that global IC demand is expected to grow by 20% this year and another 10% in 2022. The shortage will continue in 2022.

Meanwhile, Manuel Zaraoza, managing director of Malaysia Pacific Industries BHD (MPI) Group, said the company expects the semiconductor shortage to continue until 2022, as strong demand is putting pressure on the global supply chain.

He noted that the chip industry continues to be hampered by COVID-19 epidemics.

He said that according to the Semiconductor Industry Association, companies in the semiconductor industry recorded quarterly growth of 8.3% and annual growth of 29.2% in the second quarter of this year (Q2 2021). ).

“The double-digit increase in y-o-y is due to a sharp slump in the second quarter of 2020 due to the Cove 19 epidemic,” he noted.

On MPI, he said that despite external challenges, the company forecasts strong performance in the next quarter. With continued growth in segments such as automotive, 5G network deployment, data centres and the Internet of Things.

“MPI is not facing a major shortage of chips yet, as our suppliers have been associated and prioritise with MPI for more than 20 years. He added that the entire industry would be affected if the chip shortage persisted for a long time.

Malaysia is one of the top ten countries in the semiconductor industry, accounting for about 7% of global semiconductor trade and about 13% of global capacity in terms of back-end test and packaging. The global outsourced semiconductor assembly and test market is projected to grow from US 32 32.5 billion (US $ 1 = RM4.15) in 2020 to US 45 45.2 billion by 2026, with annual growth of 5.7%.

Malaysia’s semiconductor industry includes many sectors, including electronic manufacturing services, automation, precision and engineering, as well as medical devices that use electronics and global positioning systems. The industry contributes 6.8% to the gross domestic product (GDP) with 575,000 employees.

Muhammad Asim