by ANIS HAZIM / graphic by TMR

THE global chip shortage will certainly affect Penang’s electrical and electronics (E&E) industry as it will result in delays in production, as well as increased production costs.

InvestPenang director Datuk Seri Lee Kah Choon said the situation in Penang is likely to be similar to the E&E industry globally.

“Chip shortage is a global issue and not only specific to Penang. We are intertwined with the rest of the global supply chain,” Lee said in a text reply to The Malaysian Reserve (TMR).

He said that the supply chain disruption is tumbling due to the continuous disruption since the pandemic as it has affected the production.

Thus, he foresees that the chip shortage will continue due to the technological breakthrough that will ramp up the need for chip supply as well as the inventory build-up by the companies that have exacerbated the global chip shortage.

In 2021, Penang saw a boost in its investments in the E&E industry as it surged 440% year-on-year (YoY) to RM76.2 billion of total approved manufacturing investments.

The state also recorded the highest manufacturing foreign direct investments in Malaysia with 98% of approved manufacturing investments.

Among the companies invested in Penang are the US-based Indium Corp, TTM Technologies Inc (US) and Simmtech Co Ltd (South Korea).

Separately, the global chip shortage has wreaked the automotive industry in Malaysia, while the signs of recovery are yet uncertain.

Malaysian Automotive Association (MAA) saw a 24.41% drop to 56,213 total vehicle sales in April from 73,222 units in March due to chip shortages and components as well as shipment delays.

“Chip shortage will delay production of motor vehicles, especially local assembly and manufacturing of vehicles.

“So deliveries of vehicles to customers will be delayed and create a longer waiting period,” MAA president Datuk Aishah Ahmad told TMR.

In the meantime, the president said she could not project any time frame when the disruption will recover.

“As far as chip shortages — it would be for the chip manufacturers to take the necessary actions to speed up the delivery,” she noted.

Meanwhile, the Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai said that the chip demand and the capacity are still robust despite the disruption.

“The global chip shortage do not really affect (Malaysia), but currently the industry finds it is difficult to fulfil the demand of the semiconductors,” Wong told TMR.

According to him, the chip disruption has led to a pile in producing the semiconductor parts.

“What we are doing now is increasing the capacity to satisfy the demand. But it will take some time due to the shortages,” he said.

Looking forward, he is optimistic that the demand will be gradually satisfied as most semiconductor companies have taken all the measures to increase their output.