Supply chains snarl Taiwan tech firms as some strive to meet demand

AUO

03/05/2022 04:28

By Ben Blanchard and Sarah Wu
    TAIPEI, May 3 (Reuters) - Taiwanese tech suppliers are
suffering from supply constraints, even for such things as
packing materials, as some struggle to take advantage of soaring
demand.
    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 clutch of important companies in the
industry over the past week offer a snapshot of both the
opportunities and problems they face: a strong market for
products, especially in automotives and high-end computing, but
difficulty in securing inputs, notably from places in China
constrained by COVID-19 lockdowns.
    Leading Taiwanese flat-panel maker AU Optronics (AUO)
 2409.TW  saw its first-quarter net profit drop by more than
half from a year earlier.
    While AUO supplies displays for top carmakers, such as Tesla
 TSLA.O , and for high-end notebooks, the materials that
threaten to limit its production are at times far more low-tech.
    "The less important the material is, the more we lack it.
Why? Because their inventory tends to be lowest, so we need
large-volume transportation. But right now the biggest challenge
is transportation," Chairman Paul Peng told an earnings call.
    "So if I tell you what we lack most is cardboard boxes and
packaging tape, don't be surprised."
    Such materials are typically bought from China, where
lockdowns have closed factories and throttled transportation.
    Joseph Tung, chief financial officer of Taiwanese chip
testing and packaging firm ASE Technology Holding Co Ltd
 3711.TW , told an earnings call that demand for cellphones and
some consumer products seem to be "relatively weaker".
    "But from our standpoint, I think the overall situation
still remains very healthy," he said. "In terms of
high-performance computing, in terms of networking and
automotive, we still see very, very strong momentum."
    There is a similar message from Powerchip Semiconductor
Manufacturing Corp  6770.TWO , a supplier of power-management
chips.
    Company Chairman Frank Huang told a shareholder meeting
that, although current demand was not as strong as before, the
Powerchip Semiconductor's production capacity was still fully
loaded.
    "Absolutely, there is not enough supply for auto chips,"
added Huang, whose firm provides contract manufacturing services
for logic and memory chips for power management, with such
customers as MediaTek Inc  2454.TW , Taiwan's largest designer
of chips for mobile phones.
    Powerchip is building a new T$278 billion ($9.43
billion)factory in Miaoli, northern Taiwan, that is expected to
come online in the fourth quarter.
    That same strong demand is also benefiting United
Microelectronics Corp  2303.TW , a competitor to the world's
largest contract chipmaker, Taiwan Semiconductor Manufacturing
Co Ltd  2330.TW . United Microelectronics said it was still
having problems meeting customer demand even as notebooks and
smartphones were showing some weakness. urn:newsml:reuters.com:*:nL4N2U515D
    Delta Electronics Inc  2308.TW , a supplier of power
components to such companies as Apple  AAPL.O  and Tesla, said
it was expanding manufacturing "everywhere", and was
particularly bullish on electric vehicles (EVs). It pointed to
strong demand from even traditional automakers, such as Ford
Motor Co  F.N  and General Motors Co  GM.N , for their EV
offerings.
    "There is a big backlog for EVs, for Delta and automakers.
The challenge is to balance the materials," Delta Chairman
Yancey Hai told an earnings call.
    "If you lack the materials, the factories can't operate.
It's hard for everyone, but I think the future is there."
    ($1 = 29.4910 Taiwan dollars)

 (Reporting by Ben Blanchard and Sarah Wu; Editing by Bradley
Perrett)
 ((ben.blanchard@thomsonreuters.com;))