Experts: Global supply still on track, but chip delay will be seen in short term

The recent COVID-19 outbreak in East China's Suzhou, Jiangsu province, will have a limited impact on the global supply of semiconductors and other electronic industries as local companies start to resume operations, but chip delays will come over the short term, industry experts said on Tuesday.

German industrial giant Bosch told China Daily on Tuesday its Suzhou company is "working hard to resume production to reduce impact on customer supply", after one of its staff was confirmed asymptomatic for COVID-19 on Friday.

Bosch Suzhou is one of the world's largest manufacturing bases for the company. It produces automotive electronics, chassis systems controls, car multimedia and machine building.

The move came as HeJian Technology Corp and King Long Technology (Suzhou) Ltd, the Chinese mainland units of two semiconductor firms from Taiwan, were confirmed to have employees testing positive for COVID-19 in their Suzhou companies. Both firms' production was temporarily halted.

"The temporary shutdown will surely create some short-term problems in upstream and downstream supply chains of industries like semiconductors and vehicles because of the city's important role in electronics manufacturing," said Jiang Han, a senior researcher at market consultancy Pangoal.

Suzhou Industrial Park, where Bosch, HeJian and King Long are located, housed six of the top 10 chip packaging companies and 28 semiconductor equipment and material companies by the beginning of 2021. More than 1,837 high-tech firms from home and abroad have set up their branches there.

"However, this round of the pandemic is expected to come under control soon with the government's effective COVID-19 prevention and control efforts. In other words, production can recover and get back on track once the situation is under better control and will not have a big impact on global supply in the long term," Jiang said.

LCD driver provider Novatek Microelectronics said its Suzhou unit will strictly follow the local government's anti-COVID-19 requirements and it will not see a significant impact on its operations.

Another semiconductor firm, Holtek Semiconductor, also said it will maintain normal operations by using its chip inventories, but will keep a close eye on the chip supply situation in Suzhou.

Roger Sheng, vice-president of research at the United States market research company Gartner, said the Suzhou outbreak will have an impact on chip supplies, but it should not be that serious.

"What is more noticeable is that if the epidemic continues to spread to some other cities, and factories have to be shut down one after another, it will have a more profound impact on industries as a whole, especially as the country holds a zero-tolerance principle to the pandemic," he said.

Zhong Nan and Ma Si contributed to this story