Supply Chain Disruptions: Rising Prices and Lockdowns

Learn about how the semiconductor industry continues to adapt to the supply chain disruptions from Covid-19 and the Delta variant.

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September Industry Update - Supply Chain Disruptions

The latest Covid surge threw the semiconductor supply chain another curveball. The Delta variant is to blame for the potentially extended lockdowns and rising infections across the globe. For Vietnam, the variant damaged its grip on the pandemic. In Malaysia, extended lockdowns threaten to slow production even more. This has caused many issues as Southeast Asia is a crucial part of the supply chain. From rising prices to production shortages, read our latest update for the newest insights.

TSMC to Rise Component Prices Again

The price of Semiconductors continues to rise for Taiwan Semiconductor Manufacturing Co. Shortages in supplies and rising prices of silicon wafers are steadily bumping the prices overall. Prices began rising in 2020 during the last quarter. Taiwan Semiconductor Manufacturing Co., also known as TSMC, produces semiconductors for companies like Apple, Qualcomm, and more. Price changes are set to take effect on October 1st. Overall, prices have risen for nearly every part of the supply chain. The pandemic has undoubtedly altered the shape of the supply chain as we know it.

Updates on South-east Asia Lockdowns

Malaysia

Malaysia continues to see rising cases in Covid-19. In addition to the obvious issues caused by the new Delta variant, there is an expected increase in the supply chain disruptions. Suppliers such as NXP Semiconductors, STMicroelectronics, and others are dealing with the fallout of rising infection rates. This is making recovery difficult for them. Extended lockdowns are likely, and this may ultimately reduce manufacturing. Lockdowns in Malaysia were initially put into place after a spike in infections. Since then, cases have not slowed. In fact, the rising cases continue to overwhelm the country. Many of the noted Covid-19 clusters in Malaysia involved the workplace. The date for restoring full production capacity is undetermined at this time.

Vietnam

Vietnam faces lengthened lead times amidst the Covid-19 struggle. Though border restrictions, quarantines, and more assisted Vietnam in maintaining low numbers of infections during the beginning of the pandemic, the Delta variant has sent the country reeling. Low vaccination rates and the high admission rate of the variant coupled together to cause a perfect storm. Because of this, the supply chain continues to become more complicated. This impacts many industries, including the automotive industry. With extended lockdowns leading to halted or slowed production, the industry struggles to keep up.

Global Light Vehicle Production Shortage Expected to Continue to Q2 of 2022

The supply chain disruptions in the automotive industry are a multifaceted issue. At the beginning of the year, much of the supply chain disruption was due to a fire in a Japanese factory and an unexpected winter storm in Texas. Thankfully, the disruptions from these events have mostly been resolved. However, the damage from the pandemic is still unfolding and unlikely to disappear any time soon. Assembly and test locations are being heavily impacted by the impact of Covid-19. These sites are mainly located in areas with low vaccination rates, and the extended lockdowns ultimately result in halted labor. This has a domino effect on the rest of the supply chain. This part of the industry is dealing with a truly unique issue. Because semiconductors are in shortage, this has led to a shortage of the very equipment needed to make more semiconductors. This is just one example of the layered issues resulting from the supply chain disruptions.

As the Covid-19 pandemic persists, so does the semiconductor industry. With every bump and twist, the industry works to change and adapt. Considering extended lockdowns, rising prices, and an unforeseeable future, there is still much to navigate. Though the supply chain is shaky, Velocity Electronics is dedicated to helping you navigate. From initial order to quality assurance, we strive to make your entire experience memorable.

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