Tech Companies: Supply chains attack Taiwanese tech companies as some struggle to meet demand

Taipei: Taiwanese technology suppliers are suffering from supply constraints, even for things like packaging materials, as some struggle to take advantage of increased demand.

Taiwan is a key supplier to the global electronic ecosystemwith parts used in everything from refrigerators and smartphone to cars and missiles.

Comments from some major industry companies over the past week that offer a snapshot of both the opportunities and problems they face: a strong market for products, particularly in the automotive and high-end IT sectors, but struggles to guarantee inputs, especially from places in China forced by COVID-19 blockades.

Leader in Taiwanese flat panel manufacturing AU Optronics (AUO) saw its first quarter net profit drop by more than half from the previous year.

So read | Amid supply chain problems, Indian smartphone shipments fell by 1% in the first quarter of 2022

While AUO provides displays for top car manufacturers, such as Teslaand for high-end notebooks, the materials that threaten to limit production are sometimes much more low-tech.

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“The less the material is important, the more we lack. Why? Because their inventory tends to be lower, so we need large volume transportation. But right now the biggest challenge is transportation,” said President Paul. Peng in an earnings call.

“So if I told you what we miss most are cardboard boxes and packing tape, don’t be surprised.”

Such materials are typically sourced from China, where the blocks have closed factories and restricted transportation.

Joseph Tung, chief financial officer of Taiwanese chip and packaging testing company ASE Technology Holding Co Ltd, said on an earnings call that demand for cell phones and some consumer products seemed “relatively weaker.”

“But from our point of view, I think the overall situation still remains very healthy,” he said. “In terms of high-performance computing, in terms of networking and automotive, we still see very, very strong momentum.”

There is a similar message from Powerchip Semiconductor Manufacturing Corp, a supplier of power management chips.

Company president Frank Huang told a shareholders meeting that although current demand wasn’t as strong as before, Powerchip Semiconductor’s manufacturing capacity was still at full capacity.

“Absolutely, there is not enough supply for car chips,” added Huang, whose company provides contract manufacturing services for power management logic and memory chips, with clients such as MediaTek Inc, the most. Taiwan’s major mobile phone chip designer.

Powerchip is building a new AU $ 278 billion ($ 9.43 billion) factory in Miaoli, northern Taiwan, which is expected to go live in the fourth quarter.

The same strong demand is also benefiting United Microelectronics Corp, a competitor to the world’s largest contract chip maker, Taiwan Semiconductor Manufacturing Co Ltd. United Microelectronics said it still has trouble meeting customer demand even though notebooks and smartphones they showed some weakness.

Delta Electronics Inc, a supplier of power components to companies like Apple and Tesla, said it is expanding manufacturing “everywhere” and is particularly bullish on electric vehicles (EV). It also indicated strong demand from traditional automakers, such as Ford Motor Co and General Motors Co, for their electric vehicle offerings.

“There is a big backlog for electric vehicles, for Delta and the automakers. The challenge is to balance the materials,” Delta president Yancey Hai said in an earnings call.

“If you lack the materials, the factories can’t function. It’s difficult for everyone, but I think the future is there.”

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