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9 Nov, 2021 08:13

Global supply chain issues to ease on news from Southeast Asia

Global supply chain issues to ease on news from Southeast Asia

As the Covid-19 pandemic subsides across Southeast Asia, numerous factories and manufacturers in the region are on course to rapid recovery after months of production cuts that put a strain on global supply chains.

Vietnamese authorities have eased restrictions as the number of coronavirus cases declined, with the daily infection rate this month down more than 50% from the late-August peak of 17,000 cases.

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Around 200 factories making sportswear for Nike have resumed operations, Nikkei Asia reports citing local media. Reports also state that plants operated by Samsung Electronics and Intel will “provide assistance so that both companies’ facilities will return to full production this month,” citing industrial park executives in Ho Chi Minh City.

Factories making electronic components for the auto industry are also reportedly returning to full capacity, with Japan’s Furukawa Electric company making car wire harnesses signaling a steady uptick in production at its Vietnam plants. The firm’s factory in Ho Chi Minh City has “returned to a position where they can respond to requests from a client,” Nikkei reported citing company’s head Keiichi Kobayashi.

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Factories in south Vietnam were placed under heavy restrictions back in July, with mass sleepovers as workers were forced to work around the clock and only up to 50% of staff was allowed on sites. These resulted in factory stoppages and production cuts, and had an impact that was especially damaging to the region’s automotive industry.

In Malaysia, which houses numerous plants for automotive semiconductors, over 90% of adults are now fully vaccinated against Covid-19. According to John Chia, chairman of Malaysian semiconductor assembler and tester Unisem in Ipoh, “we are back to normal operations, but due to the freeze of foreign workers and extreme difficulty in recruiting locals, we are operating at about 80% of our installed equipment capacity.” The company is currently building its third factory in China’s Chengdu to keep up with blossoming global demand in semiconductors.

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Malaysia imposed a nationwide lockdown due to a surge in Covid-19 cases in June. Unisem’s Ipoh plant was temporarily shut down in September, as well as a semiconductor factory of Geneva-based STMicroelectronics. Both closures resulted in a semiconductor supply shortage, which led to production cuts at major automakers. Now the plants have resumed operation, and STMicroelectronics is reporting “a progressive return to 100% production capacity during Q3” at the end of October.

Learning from Covid-19 not to keep all their eggs in one basket, many firms are now considering “relocation and pluralization of production sites” to maintain supply chains in the event of a new pandemic, according to reports.

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