Amidst global criticism, Malaysia gets to work fulfilling backlog orders for chips

The lockdowns in Malaysia and other parts of the world have caused supply disruptions in various industries including the semiconductor industry, causing the widely-known chip shortage.

CEO of Mercedes-Benz Ola Källenius said that the company expects a significantly lower third-quarter sales due to the global semiconductor shortage.

"With the plant closings at semiconductor suppliers in Malaysia and elsewhere, the challenge has now become even greater, so that our sales in the third quarter will probably be noticeably below the second quarter," he said in an interview with Automobilwoche.

Kaellenius was cautious about predicting the end of the shortage, pointing out that supply disruptions such as the lockdowns in Malaysia were impossible to foresee. "What is important is that demand for cars is there," he said. "At some point the chip problem will also be solved."

Also read: Failure to contain Covid-19: Chip manufacturers mull exiting Malaysia

Volkswagen CEO Herbert Diess has confirmed to CNN that Malaysia’s struggle with Covid-19 has affected their suppliers.

“It has gotten worse already. We expected that we would have relief after the summer break, which didn't happen because in Malaysia, we had really quite significant problems with Covid. Some of our suppliers, the back ends of our suppliers are mostly based in Malaysia, and three plants were hit hard,” said Diess.

Volkswagen, Ford, Nissan, and Tesla have also confirmed that supply disruptions of semiconductor parts from Malaysia are causing problems to the plants in USA and Europe.

As restrictions are gradually easing off in Malaysia, efforts are underway to fulfil the backlog of orders in the semiconductor industry.

President of Malaysia Semiconductor Industry Association (MSIA), Dato’ Seri Wong Siew Hai, told Bernama, “We thank the government for understanding that electric and electronics (E&E) is one of the essential service sectors, and with the latest announcement, we are working around the clock to ship as many products as possible.

“We also see more companies getting their employees vaccinated, and based on our survey, some companies are investing more and hiring more workers to boost their productivity as orders are quite high.”

He added that some of the pressure in meeting demand has been relieved since the government has allowed factories to operate at 100% capacity, on the condition that 80% of the employees are fully vaccinated.

Also read:

VW AG: Shutdowns in Malaysia affecting global production, could get better by end-Sept

Worsening Covid-19 situation in Malaysia leads to plant stoppage for Ford Germany

Bosch: Disruption in supply from Malaysia affecting Nio and Tesla

China to reduce production to 900k units for August due to chip shortage from Malaysia

Not just semiconductors, steel is getting more expensive, car prices could go up