GEORGE TOWN: An economist has called for the immediate lifting of all remaining restrictions affecting the semiconductor industry in order to address the global shortage of chips for car makers.
Geoffrey Williams of the Malaysia University of Science and Technology (MUST) said Malaysia must be careful to maintain its good position in the semiconductor industry if it did not want to lose out to other countries.
Speaking to FMT, he said the supply and logistics sector should be allowed to return to normal to allow the quick revival of the chip manufacturing ecosystem.
News reports have said that the shortfall from Malaysian companies serving major semiconductor companies had caused a chip shortage that had brought car assembly lines around the world to a halt.
According to Reuters, 13% of global chip packaging and testing is traded through Malaysia, which holds an overall 7% in the world semiconductor trade.
Williams said the country could not afford to lose this good position and should start clearing out backlogs and preparing to meet new demand.
“The priority should be to build back relationships and then allow the trade to grow by being a good supply chain partner,” he said. “Naturally, prices will be higher due to market demand, but supply and quality must be maintained. Otherwise customers may look elsewhere.”
D Vidya, who runs an electronic manufacturing services factory in Kulim, told FMT he was having trouble keeping up with demand, mainly because of the 60% restriction on work forces.
He alleged that enforcement officers were excessively strict to the point of being nitpicky.
The slow vaccination rate among workers was not helping, he added.
Vidya, whose factory makes chips for medical and industrial use for the American and European market, also said production had not been efficient because manufacturing lines had to be stopped too frequently.
He said stoppages came about when workers were found to have been in close contact with Covid-19 cases and also because of the inter-district travel ban in Kedah, which was finally lifted yesterday.
Vidya said his company, which hires mostly locals, could not find new factory operators despite job vacancy notices posted outside his factory.
The electronics industry in Malaysia is said to be growing rapidly because an increasing number of operators are moving out of China.
“Electronics players are up to their eyeballs with demand,” Vidya said.
Economist Barjoyai Bardai of Universiti Tun Abdul Razak called for a focus on a long term solution.
He said the government should set up a semiconductor institute to focus on research and the design of chips.
“That way, all can be done here, not the United States or Bangalore. We can build our own expertise and in the long term become big vendors rather than a small vendor supporting the industry.”
Barjoyai said Malaysia was currently involved mostly in testing and packaging chips made in Taiwan.
Recently, Taiwan’s economy minister, Wang Mei-hua, said Southeast Asia, especially Malaysia, had been causing a bottleneck in chip production because factories were shut.
Reuters quoted her as saying Taiwan was trying its best to fill the void but could not solve the problem alone because of the complexity of the supply chain.