New COVID-19 Surge in Asia Now Affecting Global Chip Supply Chain

A recent report from The Wall Street Journal documents rampant COVID-19 outbreaks across Asia, and how they are not only delaying global shipping but also worsening an already bad shortage of semiconductors across the world.

As economies across the planet make their way to recovery, a COVID-19 outbreak at one of the world’s busiest freight ports in southern China has resulted in global shipping delays on par with those caused by the blockage of the Suez Canal earlier in the year.

A COVID-19 outbreak among dockworkers at Yantian, a container port in the city of Shenzhen in southern China, has dealt a major blow to global shipping out of China. With the port currently operating at approximately 30% capacity, roughly 160,000 fright containers are currently in limbo at the port as Chinese authorities try to get a handle on the situation.

Some businesses have even chosen to divert freight to other ports from Yantian, but that option is heavy on both the pocket and the estimated delivery date.

Elsewhere in Asia, spikes in COVID-19 at critical points along the semiconductor supply chain have resulted in even more production and supply deficits. Taiwan, which alone accounts for a fifth of the world’s chip manufacturing capacity, is currently dealing with its worst outbreak of COVID-19 since the beginning of the pandemic.

King Yuan Electronics Company, one of the largest chip testing and packaging companies in the country, has had over 200 employees test positive for COVID-19 this month, with another 2,000 workers currently in quarantine.

Taiwan Semiconductor Manufacturing Company (TSMC), which produces 92% of the world’s most bleeding-edge chips, remains largely unaffected by the current COVID-19 outbreaks, is operating at full capacity, and even posted a quarterly profit that beat market estimates.

Despite operating at full throttle, TSMC does not have enough fabrication capacity to meet the global chip demand at this time and believes that the chip shortage will carry on into 2022.

Across the sea in Malaysia, COVID-19 outbreaks have forced the government to impose travel bans and a lockdown that is expected to reduce semiconductor output by anywhere between 15% and 40%.

“It will disrupt the supply chain, somewhere, somehow,” said Wong Siew Hai, president of the Malaysia Semiconductor Industry Association, about the chip production deficit.

Samsung has already had to scrap its plans to launch a new Galaxy Note this year due to the semiconductor shortage.

Semiconductors are used to manufacture everything from desktop processors and phones to cars and other consumer electronics, so the fallout from the ongoing supply shortage will spread across various industries. And the more recent outbreaks of the virus across Asia will only serve to make matters worse.