Semiconductor players warn of major industry impact if E&E ops not allowed to operate under EMCO

Semiconductor players warn of major industry impact if E&E ops not allowed to operate under EMCO
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KUALA LUMPUR (July 3): The Malaysia Semiconductor Industry Association (MSIA) is appealing to the government to allow electrical and electronics (E&E) factories in Selangor and Kuala Lumpur to operate during the enhanced movement control order (EMCO).

In a statement today, MSIA president Datuk Seri Wong Siew Hai said the association is greatly concerned about the announcement of the EMCO in many Selangor districts and several localities in Kuala Lumpur as the directive does not approve the operations of E&E factories, which are classified as an essential industry.

“Malaysia is a key player in the global semiconductor trade. Approximately 7% of total global semiconductor trade flows through Malaysia. In addition, it is a major part of the global electronics supply chain with E&E exports at 39% (RM386 billion) of Malaysia’s total export and contributed 6.8% of national gross domestic product (GDP) and employed 575,000 in 2020.

"The disruption to the supply chain will result in the inability of global companies to assemble and produce critical infrastructure [as well as] medical equipment like ventilators, medical devices and other essential products," Wong said.

Besides that, given that some key chipmakers are located in the EMCO areas, any production disruption would not only reverse the positive spillover the firms gained from the global chip shortage, but also put Malaysia in a negative spotlight for exacerbating the global chip supply problem.

"In addition, two biggest burn-in service suppliers that provide support to other factories in Malaysia are located in Kuala Lumpur. The shutdown will have a major impact on the E&E industry in Malaysia," said the MSIA.

He warned that the disruption could potentially affect overseas corporate investment intentions and would likely result in the permanent transfer of products to other locations outside of Malaysia.

“The many small and medium enterprises (SMEs) supporting the multinational companies (MNCs) and large local companies (LLCs) will also be severely impacted. Customers may also look for suppliers elsewhere. All these factors will pose risks for losing the E&E ecosystem, which has been organically developed for the past 50 years,” he added.

Wong urged the government to take companies that had adhered to the standard operating procedures (SOPs) into consideration.

“Over the last three weeks, 14 surprise audits have been conducted by the authorities on our member companies and all of them were found to be fully compliant with the SOPs,” the MSIA said. It also claimed that one of the surprise audits, attended by a minister, left the latter impressed.

"We urge the authorities to take into consideration these exemplary companies that have maintained the highest standards of SOP compliance and extended great efforts to assist the country to break the chain with regular testing ... the MSIA appreciates the government’s swift action in protecting the rakyat from Covid-19. However, we need to balance between lives and livelihoods," he added.

Tan Choe Choe