A trio of Malaysian semiconductor manufacturers (Infineon Technologies AG, NXP Semiconductors NV and STMicroelectronics NV) have been hit hard by the surging COVID cases in the region - jeopardizing plans to lift instated lockdowns and restore full production capacity. The news, via Bloomberg is that the reported daily infection figures have pushed past 20,000 for a seven-day average, up from just over 5,000 in June - meaning that there's a cavalcade of COVID infections just waiting to hammer the semiconductor manufacturing industry a little bit more. The delta variant of COVID is a particularly egregious actor in the recent uptake in infections across the country.
Containment policies currently in place in Malaysia would force these semiconductor manufacturers to cease operations for as many as 14 days should any of them report three concurrent employee infections - and Infineon and STMicroelectronics have already announced the shuttering of some of their production facilities due to COVID. These companies (and others) have already received privileged treatment on account of their strategic importance in the general semiconductor business - and to Malaysia's economy in general. Companies were allowed to keep operating with 60% of their workforces during the June lockdowns, and they’ll be able to move back to 100% when more than 80% of their workers are fully vaccinated.
The difficult times in Malaysia should have a proportionate effect in an industry already plagued with general shortages throughout its supply lines, which has seen globally-extended lead times for semiconductor delivery, as well as resource stockpiling from various industry players. Malaysia's semiconductor manufacturing landscape is a playground for some of the last steps in semiconductor manufacturing - packaging. Electronics and electrical products account for 39% of the country’s total exports - and the lockdowns and factory closures have already impacted some companies' bottom lines to the tune of millions. As Infineon Chief Executive Officer Reinhard Ploss told analysts, the total impact from the current shutdowns was in the “high double-digit” millions of euros.
Besides final ship packaging, Malaysia is also a key production base for multilayer ceramic capacitors, or MLCCs, a component required by an array of products from smartphones to cars - to graphics cards (you may remember the initial RTX 30-series launch and the entire fuss around the choices of MLCC capacitors among manufacturers, which resulted in some RTX 30-series graphics cards not working within NVIDIA's specs. Whether or not the Malaysia outbreak too will have an impact on the global graphics card market is anyone's guess, as it isn't clear if Nvidia CEO Jensen Huang was already including this outbreak on his latest comments regarding the chip shortage lasting well into 2022. even if there isn't a direct graphics card impact, it's likely that many DIY hobbyists will start seeing supply issues on some components of choice, as STMicroelectronics and NXP manufacture some of these products - STM's STM32 Arm MCU, for example, is a popular such chip whose production could be impacted by the shutdowns.