Taiwan is a key supplier to the global electronics ecosystem, with parts used in everything from refrigerators and smartphones to cars and missiles.
Comments from a series of prominent companies in the sector over the past week offer insight into the opportunities and challenges they face: a strong market for products, particularly in the automotive and high-end computing, but difficulties obtaining inputs, especially from parts of China under COVID-19 restrictions.
Taiwan’s leading flat-panel panel maker, AU Optronics (AUO), saw its first-quarter net profit fall by more than half from a year earlier.
While AUO supplies screens for the biggest automakers, like Tesla, and for high-end laptops, the materials that threaten to limit its production are sometimes much lower-end.
“The less the material, the more we are short of it. Why? Because their stocks tend to be the lowest, so we need high volume transportation. But right now the biggest challenge is transportation.” , President Paul Peng said during a conference call on the results.
“So if I tell you that what we miss the most is the cardboard boxes and the packing tape, don’t be surprised.”
These materials are typically sourced from China, where the lockdowns have resulted in factories shutting down and transportation being strangled.
Joseph Tung, chief financial officer of Taiwanese chip testing and packaging company ASE Technology Holding Co Ltd, told a conference call about the results that demand for cellphones and some consumer products appears to be “relatively weaker”.
“But from our point of view, I think the overall situation remains very healthy,” he said. “In terms of high performance computing, in terms of networking and automotive, we still see very, very strong momentum.”
The message is similar from Powerchip Semiconductor Manufacturing Corp, a supplier of power management chips.
Company chairman Frank Huang told a shareholder meeting that while current demand isn’t as strong as before, Powerchip Semiconductor’s production capacity is still fully loaded.
“Absolutely, there is not enough supply for automotive chips,” added Huang, whose company provides contract manufacturing services for logic chips and memory chips for data management. energy, with customers such as MediaTek Inc, Taiwan’s largest designer of mobile phone chips.
Powerchip is building a new 278 billion Taiwan dollar ($9.43 billion) Miaoli plant in northern Taiwan, which is expected to come on stream in the fourth quarter.
This same strong demand also benefits United Microelectronics Corp, a competitor to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co Ltd. United Microelectronics said it still had problems meeting customer demand, even as laptops and smartphones showed some weakness.
Delta Electronics Inc, a supplier of power components to companies including Apple and Tesla, said it was expanding production “everywhere” and was particularly optimistic about electric vehicles (EVs). She pointed to strong demand from traditional automakers, such as Ford Motor Co and General Motors Co, for their EV offerings.
“There’s a big backlog for EVs, for Delta and the automakers. The challenge is balancing the materials,” Yancey Hai, president of Delta, said in a conference call about the results.
“If you run out of materials, factories can’t function. It’s hard for everyone, but I think the future is here.”
($1 = 29.4910 Taiwan dollars)