Another region 'closed the country'! Or trigger a new round of shortages!

The outbreak in Malaysia is heating up, and the number of newly diagnosed cases in a single day remains high. Prime Minister Muhyiddin announced a nationwide movement control order that prohibits all people from crossing states and counties. Social, sports, education, etc. are also banned. The number of prayers on Eid al-Fitr is highly restricted. 

Malaysia's nationwide blockade! Violators may be arrested!

According to reports, Malaysia added 3,807 new confirmed cases today, with a total of 444,484 confirmed cases nationwide; another 17 new deaths and a total of 1,700 deaths.

The Prime Minister of Malaysia Muhyiddin Yassin announced that from May 12 to June 7, a "movement control order" and related control measures will be implemented nationwide, prohibiting cross-state and cross-county, and prohibiting social gatherings, sports, and Educational activities to respond to the spread of the new crown epidemic.

On May 11, the Chinese Embassy in Malaysia issued an important reminder with the following content:

On May 10, Malaysian Prime Minister Muhyiddin announced in a statement that from May 12 to June 7 the "movement control order" will be restarted nationwide to curb the spread of the COVID-19.

At the same time, the latest standard operating procedures were announced, including prohibiting cross-state and cross-county, banning dine-in, banning group social activities, banning most sports or entertainment and leisure activities, closing schools and other educational institutions, and limiting the number of passengers per vehicle. Employers such as enterprises are required to arrange for their employees to work from home.

Other economic activities are allowed to continue under the premise of observing epidemic prevention measures. During Eid al-Fitr, visits and tomb sweeping are prohibited, prayer activities in mosques and other prayer places are prohibited from exceeding a limited number of people, and Ramadan and Iftar bazaars are also prohibited from operating.

The Chinese Embassy in Malaysia would like to remind Chinese citizens in Malaysia:
One is to pay attention to local epidemic information and the latest epidemic prevention measures. Understand, support and cooperate with the Malaysian government to prevent and control the epidemic, pay close attention to and abide by the latest epidemic prevention measures and related arrangements, and comply with standard operating procedures of various industries. The embassy solemnly reminds Chinese citizens in Malaysia that foreigners who violate the "movement control order" will be arrested and charged to court. Compatriots are requested to put an end to luck and earnestly abide by the arrangements of the "movement control order".

Capacity may be critically hit, silicon wafers, CPUs, passive components, packaging and testing foundry.

The market is currently out of stock. After the action control order is issued, whether silicon wafers, CPUs, passive components, packaging and testing foundry production capacity will be affected and even more out of stock is the focus of the industry.
As we all know, Malaysia is a major semiconductor production center. There are more than 50 semiconductor companies here, most of which are multinational companies, including AMD, NXP, ASE, Infineon, STMicroelectronics, Intel, Renesas, Texas Instruments, ASE, etc. Therefore, compared with other Southeast Asian countries, Malaysia has always had its unique position in the global semiconductor packaging and testing market.

In addition, Malaysia is also a strong place for the manufacture of resistance products for Japanese and Taiwanese enterprises, especially Taiwanese resistance manufacturers. A large proportion of the resistance production capacity of Huaxin Technology and Wangquan (under Kilixin) is in Malaysia.

In addition to resistance products, Japan's Murata (inductors, MLCC), Nichicon and Nippon Chemicon (aluminum electrolytic capacitors) and Panasonic (solid capacitors) all have production capacity in Malaysia.

The world's largest wafer manufacturing plant-Global Crystal also has a 6-inch wafer fab in Malaysia.

On the whole, Malaysia’s closure of the country, coupled with the outbreak of the epidemic in India and South Asia, is bound to have a certain degree of impact on the production capacity of related companies, especially in the semiconductor packaging and testing and MLCC fields.

The entry of Indian citizens is banned, and the electrical and electronic manufacturing industry is affected

In addition, due to the increasing severity of the new crown epidemic in India, Malaysia recently announced that it would prohibit Indian citizens from entering the country. Indian media ETTelecom reported that the ban will affect Penang, the center of Malaysia's electrical and electronic manufacturing industry.

Penang has a 48-year history of electrical and electronic industries. International companies including Intel, Broadcom, Micron, Motorola, Dell, and iPhone supplier Jabil have built manufacturing plants on the island. In addition, the local government has also targeted Chinese manufacturers to attract them to set up factories in Malaysia through tax exemptions and investment tax relief.

In the first half of 2019, Penang’s foreign direct investment (FDI) increased by 11 times to approximately US$2 billion. At least 50% of FDI in Malaysia comes from manufacturing. Currently, US and Chinese manufacturing companies are the two largest foreign investors in Malaysia. Because of this, the region relies on Indian IT professionals with proficient skills.

Datuk Abdul Halim Hussain, Penang State's Executive Member for International Trade, Domestic Trade, Consumer Affairs and Entrepreneur Development, stated in an online press conference , There are approximately 3,000 Indian professionals working in Penang’s software and IT industries. He said that these Indian professionals need to serve the electrical and electronic industries to meet the growing demand for chips. However, the temporary tourism ban on India may affect the development of local industries.

He added that the ban on entry of Indian citizens may prevent some Indian professionals from coming to Penang, which may affect the electrical and electronic industries, and the impact will be inevitable. However, Malaysia also needs to train local talents to reduce its dependence on imported talents and meet the industrial needs of the region.

Malaysia's share of the global back-end semiconductor manufacturing market is 8%, of which Penang Island contributes 80%. So far, Penang has established a competitive advantage in the field of microelectronics assembly and packaging and testing. The region has an ecosystem of more than 3,000 diverse local suppliers, covering fields including automation, software development, assembly, electronics, precision engineering, and metal processing.

Combining with the experience of Malaysia after the closure of the country in March last year, perhaps there will be a new wave of shortages and price increases in the semiconductor industry!