A cluster of Covid-19 infections at a factory in central Taiwan temporarily stopped operations at one of the world’s largest chip-testing companies, the latest sign of potential disruption to a technology supply chain already struggling from component shortages.
King Yuan Electronics Co. shut down its main plants in Miaoli County over the weekend and reported 182 confirmed cases as of June 5, according to Taiwan’s Centers for Disease Control. Most of those are among its foreign workers, including the factory floor staff. The government placed all 2,000 of its overseas workers, around 30% of its workforce, into 14-day quarantine, and the company has turned to temporary local workers to get its production lines running again at lower-than-normal production volumes.
Taiwan’s outbreak highlights the threat posed by the global technology supply chain’s reliance on a small number of key players. Taiwan’s chipmaking industry is a crucial supplier, and potential choke point, for companies across a wide array of sectors, from consumer electronics, to server farms to the auto industry.
Companies are already dealing with a chip shortage that has slowed production and shuttered whole automaking plants, prompting the U.S. and China to explore ways to boost their own domestic production.
While manufacturing data indicate Taiwan’s technology exporters have been little affected so far, a report by IHS Markit last week warned that Taiwan experienced severe supply chain delays in May as companies built out their inventories in an effort to protect themselves against raw material shortages and surging costs.
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