Power cuts, US demands roil Asian chip companies

It's been another eventful week for the Asian chip sector.

First it is facing further supply disruption from the electricity shortages and blackouts across China that have hit many electronics suppliers.

More than ten Taiwan electronics firms in one eastern China city said they were closing down this week, Wall Street Journal said.

Figure 1: Lights out: Blackouts across China means the global chip shortage is likely to get worse.
(Source: analogicus from Pixabay)

A Reuters report said PCB supplier Unimicron and speaker manufacturer Concraft Holding – both suppliers to Apple – as well as tooling specialist Eson Precision had all ceased production this week.

Chinese media also said key Apple supplier Foxconn was shutting down its Shenzhen factory on October 1, although the contract manufacturer described it as a "routine arrangement."

Lights out?

So far there are no reported losses of chip output, but Goldman Sachs has estimated that up to 44% of Chinese industry has been impacted by the power cuts.

The energy shortages, which appear set to continue for some time, are the result of higher coal prices and China's efforts to cut energy consumption and carbon emissions.

Meanwhile, semiconductor manufacturers have an even thornier issue to deal with – the US demand for key business data that it says is essential to deal with supply chain bottlenecks.

This came out of the White House chip summit held last week, and it surprisingly took a few days before the industry outcry began.

Officially the demand for details on "inventories, demand, and delivery dynamics" is framed as a request, but Commerce Secretary Gina Raimondo has also invoked the Defense Production Act, which could compel companies to cooperate.

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Not surprisingly, it has caused some consternation among the affected businesses and some robust media coverage in Taiwan and South Korea.

The Korea Institute for Industrial Economics and Trade told Business Korea that industry inventory had been kept secret in order to stabilize prices, "which means the US demand will lead to market fluctuations and more business difficulties."

An anonymous insider told Taiwan's China Times that the supply of sensitive customer information would affect the relationship with the customer – "and more importantly, [disclosing] wafer prices will affect the future bargaining power."

Taiwan Economic Affairs Minister Wang Mei-hua said Thursday the government would step in if businesses face any "unreasonable requests."

The companies have until November 8 to respond.

Frites shortage

We've also seen a reminder this week that it's not just China that is a competitor to the US in semiconductors. Europe is as well.

Thierry Breton, the EU commissioner for internal market, made a swing through Tokyo and Seoul this week to pitch for cooperation with the chip and other hi-tech sectors including 5G and AI.

Asia is the "epicenter of the geopolitics of semiconductors," he tweeted Thursday.

The EU is seeking Asian partners and investors to back its planned Chips Act, aimed at building Europe's own semiconductor capability and supply security.

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— Robert Clark, contributing editor, special to Light Reading