Chip Production Slows Down Due To Floods In Malaysia

After the massive flooding in Malaysia shortly before Christmas, new problems threaten the local manufacturers of semiconductor products. The chip supply chain around the world could suffer as a result of the flooding caused by monsoon rains.

As reported by the Techwire Asia portal, Malaysia suffered flooding in the days before Christmas due to heavy rains, which also affected the Selangor region and the cities of Shah Alam and Port Klang. Aerial photos showed that areas of the first-mentioned city, in which some large companies from the semiconductor industry are located, were last underwater.

Malaysia is one of the main locations for the chip industry

In Shah Alam, in addition to the actual factories of the chip industry, their employees living nearby are also said to be affected, among other things because the water supply collapsed due to the massive pollution as a result of the floods. In addition, the population had to get to safety on a large scale in order to avoid the masses of water.

The city of Port Klang is also the location of the second largest port in Southeast Asia and was also badly affected by the flooding. It is said that even existing stocks of companies located in the region could no longer be transported due to a restriction on port operations. There are already reports of companies experiencing massive problems from the floods.

For example, the Dutch supplier BE Semiconductor, which manufactures systems for chip production in the region, had to revise its business forecast for the fourth quarter downwards because its main plant in Shah Alam is affected by the floods. The plant ceased production, fearing revenue shortfalls in the region of nearly $30 million. The repair costs for the plant should also be in the millions, it said.

BE Semiconductor’s customers reportedly include the world’s largest contract manufacturer Foxconn and chipmakers STMicroelectronics, Micron, and LG Innotek. Malaysia is one of the main locations for the so-called packaging of chips. Intel and various other manufacturers have locations there, with the US chip giant only recently announcing plans to build a new factory for around seven billion dollars.