Editor's note: Our colleagues in China, Taiwan and other regions in Southeast Asia continue to report, from the ground, on the coronavirus's impact on the electronics industry. ESMChina shared the following update.
At least 30 countries around the world have declared a state of emergency, according to EPSNews sister publication ESMChina, as Covid-19 continues to spread. In addition to the urgent "cities closure" in European and American countries, major manufacturing industries in the Philippines, Malaysia and other Southeast Asian countries have announced closures in succession, which will bring challenges to the supply side of electronic components.
Philippines: MLCC capacity
The Philippines announced on March 12th that the capital Manila will be "capped" (community segregation) for 30 days starting March 15th. All sea, land and air transportation to and from Manila has been suspended. Manila has three of the eight major airports in the Philippines.
Multilayer ceramic capacitor (MLCC) capacity will be hit hard. The Philippines are an important manufacturing base for Japanese and Korean manufacturers. Murata, Samsung Electronics, and Taiyo Yuden have factories in the Philippines. Murata and Samsung Electronics have 15 percent and 40 percent of their MLCC production capacity in the Philippines. In addition, the volcanic eruption in the Philippines in January has restricted air transportation, and the industry subsequently has concerns over the supply of MLCCs.
According to ESMChina, Murata and Samsung's MLCCs are mainly used in high-end markets such as smartphones, automobiles, industry, and medical equipment due to their frequency, reliability and voltage characteristics The suspension of production from Murata and Samsung will have an impact on the high-end MLCC market.
Murata has a global monthly MLCC production capacity of about 150 billion units. Except for Japan and the Philippines (15 percent), factories are located in Wuxi, China (40 percent), Thailand and Singapore. Samsung ’s MLCC global monthly production capacity is about 100 billion units, except for the Philippines. Apart from [that] 40 percent, factories are distributed in Busan (20 percent) in South Korea and Tianjin (40 percent) in China.
However, the high-end expansion capacity of Japanese, Taiwan and mainland MLCC manufacturers will be opened through 2020, as well as factories that are located in mainland China. This can alleviate the shortage crisis to a certain extent. Yageo's MLCC production capacity is very small in Suzhou (70 percent) in China and in Taiwan, and in Southeast Asia.
Malaysia: Resistors stop production for 14 days
Malaysia announced on the March 17th that it will close the country for 14 days, including transportation and public facilities, domestic enterprises and factories. According to ESMChina, Japanese and Taiwanese companies manufacture resistors in Malaysia. Huaxin Technology and Wang Quan (a subsidiary of Qilixin) have a large percentage of their production capacity in Malaysia. In addition to resistors, Japan's Murata produces inductors and MLCCs; Nichicon and Nippon Chemicon manufacture aluminum electrolytic capacitors; and Panasonic produces solid-state capacitors in Malaysia .
Wang Quan mainly produces conventional resistors in Malaysia, and its production capacity accounts for about 50 percent of its total production. Its Kunshan and Hunan factories have recovered their production rates, which can alleviate the shortage problem. Huaxin Technology's plant in Malaysia mainly produces automotive resistors. The shutdown is expected to have a greater impact.
In terms of inductors, Japan's Murata and Chiru have factories in Malaysia. Due to the large number of participants in the global inductor market, the competitive landscape is relatively fragmented and the demand is weak. Extreme price fluctuations are not expected.
In aluminum electrolytic capacitors, Nichicon has led all models of pin-type and screw-type aluminum electrolytic capacitors since 2018. Aluminum electrolytic capacitors are mainly used in industrial, automotive, home appliances, lighting, consumer electronics and other fields. Historically, the price increase has been far less than that of capacitor resistors. It is expected that the increase will be limited.
Malaysia is a back-end semiconductor manufacturing center in Southeast Asia and companies such as Intel, Infineon, ASE, ST have set up factories in the country. Around 2018, three Chinese semiconductor manufacturers, Suzhou Gujing, Tongfu Microelectronics, and Huatian Technology announced their acquisition of a packaging and testing plant in Malaysia.
In 2010, the Malaysian government introduced a series of diversified foreign investment encouragement policies since its economic transformation plan. Manufacturers such as ASE, Infineon, and ST have focused on high-margin areas such as automobiles and industry. Intel's processor (CPU) has local capacity in Malaysia (accounting for about 50 percent of the total CPU rear-end capacity), which may exacerbate a CPU shortage. ESMChina reports that server ODM manufacturers currently have roughly 2-3 weeks of inventory.
Vietnam and India: Smartphone supply and demand
On March 24, India announced it was closing. India is both a manufacturer and consumer of smartphone-related products. With the entry of Foxconn and Wistron, part of the production capacity of iPhones and iPads is completed in India.
China's major mobile phone brands such as Huawei, Xiaomi, OV, and South Korea's Samsung have set up factories or sales centers in India. India’s closure will affect the supply of electronic products.
According to the "Indian Smartphone Report 2018" released by IDC, China’s Xiaomi accounted for 28.9 percent of the entire Indian smartphone market. In addition, Chinese brands accounted for four of the top five mobile phone sales in India. The impact of the epidemic in the Indian market will have a greater impact on demand rather than supply, according to ESMChina.
The Vietnamese government's various investment promotion policies have stimulated the entry of many large electronics manufacturing companies, including many Taiwan EMS factories such as Foxconn, Compal, and Lite-On Technology. Intel's IC packaging and testing has been stationed in Vietnam. Lixun Precision, GoerTek, Lansi Technology have either acquired or established factories in Vietnam, which has not yet closed it cities.
The similarities between Vietnamese and Indian manufacturing markets are that they focus on the smartphone industry supply chain. India focuses on the assembly and production of mobile phone terminal products, while Vietnam focuses on the manufacturing of key components. If both of these Southeast Asian countries close down, global smartphone production capacity will be hit hard, and the 5G mobile phone popularization process be slowed down, ESMChina reports.
In addition, Thailand, Singapore, Indonesia and other countries are also major places in the electronics industry. The current spread of the epidemic is unpredictable, and the follow-up impact remains to be observed.
The sudden epidemic disrupted the rhythm of the global electronics supply chain. Southeast Asian countries are second to China in the global electronics manufacturing industry. Once affected by the global industry chain, they may face paralysis. However, under the premise that both the demand side and the supply side are stagnant, the magnitude of the shortage will be buffered.