After Drought And Power Outages, Taiwan's Chip Companies Hit By Coronavirus Outbreak

King Yuan Electronics, a leading Taiwanese chip testing and packaging company, announced on Monday (Jun 7) that all its migrant employees have been suspended from working for around two weeks to contain a coronavirus outbreak spread.

In a regulatory filing, King Yuan disclosed that its June output and revenue are expected to drop 30 to 35 per cent due to the suspension of work.

Of King Yuan’s 7,300 staff, 238 are confirmed to have been infected with Covid-19.

Suspension of work in King Yuan has raised fears of adverse impact on global chip availability as company 's business is a key final step in the semiconductor supply chain. King Yuan performs the testing and packaging of chips produced by Taiwan Semiconductor Manufacturing (TSMC) which is the world’s largest contract chip maker and the crown jewel of country’s US$10.3 billion semiconductor industry.

Most of TMSC's factories are located in Taiwan. It recently announced plans to invest $100 billion over the next three years to increase production capacity as demand surges.

TSMC is also currently setting up a massive state-of-the art manufacturing plant in southern Taiwan to produce 5-nanometer processor. 5-nanometer process are superior because more transistors can fit in the same sized chip, boosting power and efficiency.

Two other tech firms in Miaoli have also reported outbreak of infections and suspended migrant workers.

The island nation is struggling to control a surge in infections. The country's Central Epidemic Command Centre announced 211 new cases on Monday, bringing the total to 11,298 with 260 deaths.

Only 3.2% of 23.5 million Taiwanese have received one dose of Covid-19 vaccine. Taiwan has accused China of scuttling its attempts to secure doses internationally.

Taiwan is also dealing with its worst drought in decades because no typhoons directly hit the island last year, resulting in poor rainfall. Chip manufacturing is done in water-intensive facilities.

The country has also been hit with frequent power outages following a surge in demand amid the drought and a heatwave, which also coincided with a crippling technical failure at a coal-fired power plant last month.

Some analysts though are of the view that automation of critical processes in chip manufacturing industry will help companies sustain production plans with minimal disruption

South China Morning post quoted Cheng-kai-an, senior industry analyst with the Market Intelligence & Consulting Institute in Taipei as saying that “In terms of the Covid-19, most of the current wafer manufacturing has been converted to automated processes, and the demand for manpower is low,” said