The electronics industry chain under “closed country” and “closed city”: I am too difficult

The overseas epidemic is spreading rapidly. Up to now, there have been millions of confirmed cases in the world. In order to avoid the further spread of the epidemic, many countries have implemented restrictive measures of “closing the country” and “closing the city”. At present, more than 60 countries or regions around the world have declared a state of emergency. Affected by this, the global electronics industry has started a “wave of production reduction and shutdown”. How serious is Duo?

India: Mobile phone manufacturing has been shut down

Following the announcement of the closure of 75 Indian administrative regions on March 22, on the evening of March 24, Indian Prime Minister Narendra Modi increased the measures to prevent and control the epidemic. Starting from the early morning of the 25th, a strict 21-day blockade was implemented nationwide, and the The speech warned that anyone who steps out of the house could face criminal prosecution, sternly ordering 1.37 billion Indians to stay at home for the next 21 days.

India is the second largest mobile phone manufacturing base after China, and the Noida/Greater Noida region is the core production hub, where about 80 mobile manufacturing plants produce mobile phones as well as chargers/adapters, battery packs, etc. components, with a total employment of more than 50,000 people.

Samsung, LG Electronics, OPPO, and vivo all have factories in Noida, but now the arrival of the epidemic has pressed the pause button on India’s mobile phone manufacturing industry, and mobile phone-related companies have announced “stop work.”

It remains to be seen how long the “Indian shutdown wave” will last. If India cannot solve the current shutdown dilemma in time, not only the local smartphone production capacity will decline, but also the global demand for mobile phones in 2020 will be greatly affected.

Malaysia: Many semiconductor factories close down

Malaysian Prime Minister Muhyiddin Yassin announced on March 16 that the country will be “closed”, announcing that a two-week “movement restriction order” will be implemented across the country from March 18 to 31. Citizens will be banned from leaving the country, foreigners will be banned from entering the country, all schools will be closed, and all government and private offices will be closed except for essential public services.

It is reported that Malaysia is one of the most important semiconductor export markets in Asia, after China, Japan, South Korea, Singapore and Taiwan. In the field of packaging and testing, Malaysia occupies 13% of the global market share, and Malaysia’s semiconductor industry occupies a very important position in the world’s semiconductor industry chain.

Affected by the news of “closing the country”, Infineon announced on March 17 that the company’s factory in Malaysia has been closed, but it will try its best to ensure that there are no problems with customer supply.

AVX said in a public statement issued on the 17th that it received notification from the Malaysian government that its Penang plant, the world’s largest MLCC manufacturing plant, will be closed from March 18 to 31.

Sony also said on the 17th that it will temporarily close two factories in Malaysia that produce TVs and other products for two weeks (March 18 to 31) in accordance with the instructions from the Malaysian government.

According to statistics, there are more than 50 semiconductor companies in Malaysia, which are mainly divided into two types: integrated device manufacturers – which manufacture and sell their own semiconductors, and dedicated foundries – which formulate semiconductors according to customer requirements.

Philippines: Many MLCC factories are affected

The Philippine police began to block access to the densely populated capital Manila on the 14th and began to “close the city”. After March 22, the epidemic prevention and control measures were increased again, and a temporary ban on the entry of foreigners was announced.

Manila, the capital of the Philippines, has the title of “MLCC factory gathering place” because there are large MLCC factories such as Murata, Samsung, and Taiyo Yuden. According to data, Murata’s large factory in Manila accounts for 15% of the company’s overall production capacity, and Samsung’s large factory in Manila accounts for 40% of the company’s overall production capacity. In addition, Taiyo Yuden also has an MLCC production base in Manila.

Also because of the peculiarities of the semiconductor industry, these MLCC factories do not directly shut down, but last week it was reported in the Philippines that the air transportation on which the chips depend will be shut down for a week. And with the development of the epidemic, the Philippine electronics industry is also facing the risk of production reduction or even shutdown.Source: Bunt Announcement

On March 23, Cypress also stated in a letter to customers that due to further epidemic control measures in the Philippines, it would cease production operations in Kawit, Philippines until April 14.

Seiko Epson also announced on March 27 that it will suspend operations at its Malaysian factory in accordance with the extension of the Malaysian government’s activity restriction order.

Japan and South Korea: Semiconductor companies have confirmed employees, and production capacity is affected

There is currently no news of “closed cities/country closures” in Japan and South Korea, but the electronics industry has also been disrupted.

South Korea had previously shut down some related factories in an emergency to prevent the spread of the virus after employees were found to be infected with the new coronavirus.

On February 22, the first confirmed employee appeared at the Samsung Gumi factory. Subsequently, Samsung Electronics announced that the Gumi factory would be completely shut down and resumed on February 24; on March 1, Samsung Turtle, which had just resumed work for a few days, The Mi factory was closed again for two days. Subsequently, although the Samsung Gumi factory found cases one after another, it no longer closed the factory and maintained the normal operation of the factory.

SK Hynix is ​​in a similar situation. On February 19, Hynix’s Lichuan plant had to quarantine 800 employees because of suspected cases and closed the area where suspected patients were active, but the plant was still operating normally. On March 13, after the first confirmed case of new coronary pneumonia appeared in the Hynix Lichuan factory, the factory did not close.

Europe and the United States: STMicroelectronics cuts production by 50% in France

The electronics industry in Europe and the United States has also been tested by the epidemic. According to Reuters, STMicroelectronics agreed to a union agreement that “the French fab will reduce production by 50% to minimize the number of employees at the factory”, which is said to last until April 2. The two factories currently closed, one is the largest 8-inch wafer fab in ST, which just invested $1.4 billion to upgrade the production line in 2019; the other is a gallium nitride process wafer factory.

South Korea’s two biggest battery makers, LG Chem/Samsung SDI, also announced they would close their U.S. factories. It is currently closed until April 13.

Japan’s Panasonic announced that it will temporarily close two lithium battery factories in the United States that are related to Tesla for 14 days, in Buffalo, New York, and Reno, Nevada.

Taiwan, China: MediaTek and TSMC are affected to some extent

Due to the further development of the epidemic, the “production reduction” of semiconductor companies caused by the decline in terminal demand may also occur one after another.

On March 10, Taiwan’s mobile phone chip manufacturer MediaTek announced its latest financial report, showing that its revenue in February was NT$18.221 billion (about 4.24 billion yuan), a decrease of 8.06% from the previous month, hitting a new low in the past year. In addition to the off-season effect, the reasons for MediaTek’s bleak performance, the unstable demand caused by the new crown virus is the main reason for the decline in MediaTek’s performance in February.

According to a report from Taiwan Business Times on March 25, with the global spread of the new crown epidemic, it is rumored in the industry that after Apple considers the decline in supply chain and terminal demand, the launch of the iPhone 12 will be delayed, and the required Apple 5nm A14 application processing The mass production schedule of the device will also be delayed by one to two quarters, and the launch of the iPhone 12 will also be delayed. It is expected that TSMC’s demand for 5nm wafers in the third quarter will be reduced to 30,000 to 40,000 pieces (about 15 million to 20 million sets of A14 processor chips). This will lead to lower TSMC capacity utilization than originally expected.

Mainland China: Facing secondary shock from overseas shutdowns

Different from other countries and regions currently affected by the epidemic, with the proper control of the epidemic in mainland China, the production environment in mainland China has basically returned to normal, and the “wave of shutdown” has passed. Announced that the current employee return rate has exceeded 90%.

In the globalized Electronic production system, mainland China, which has initially passed the epidemic control difficulties, is not immune to the second shock that may be caused by overseas shutdowns. But the good news is that China’s resumption of work will reduce a large part of the pressure on the global electronics industry chain. 37.2%, ranking first in the world; on the other hand, mainland China, which was the first to break out a large-scale epidemic, is also expected to be the first to get out of the crisis. After the epidemic is fully controlled, its manufacturing industry will also be the first to recover in the world.

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