A fresh wave of COVID-19 outbreaks in Taiwan and Malaysia has disrupted the semiconductor supply chain in those countries, worsening a global chip shortage
By mid-2021 the chip shortage was already months old: surging laptop, 5G, and car demand had pushed prices up through early 2021, and an April deep-dive traced the squeeze to fabs prioritizing higher-margin cutting-edge lines while trade-tension stockpiling drained older-node supply. Localized shocks kept stacking on top: in February, winter storms forced Samsung and NXP to shut Texas plants, worsening the same shortage.
The new outbreaks hit two of the chain's critical geographies at once — Taiwan, home to leading foundry capacity including TSMC, and Malaysia, a major back-end assembly-and-test hub that chipmakers were later still expanding into per the 2025 Nikkei report. Unlike a storm, an outbreak constrains both factories and the workers who run them, so the disruption persists across weeks rather than days.
First-order effects
Fabs and test-and-packaging sites in Taiwan and Malaysia cut or slow output immediately, tightening supply of exactly the mature-node chips the January reporting flagged as scarcest — hitting automakers and consumer-electronics makers first.
Second-order effects
Buyers respond the way the April analysis documented: stockpiling and duplicate ordering, which pulls forward demand and pushes prices higher even as actual consumption stays flat.
Third-order effects
Each successive shock — Texas storms, now Taiwan and Malaysia — strengthens the case for geographic diversification of the supply chain, the expansion strategy into Japan and Malaysia that TSMC and Intel were still weighing as late as 2025. And because shortage-era overordering inflates real demand, the cycle was set up for the opposite extreme: the swelling inventories and falling lead times chipmakers faced by late 2022.
The trend: Pandemic-era shocks keep exposing how concentrated semiconductor production is in East Asia, swinging the contracted chip cycle between shortages driven by hoarding and gluts when inventories unwind.
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@yifanxie @CostasParis @StephanieAYang @JonathanEmont An outbreak at one of the world's busiest ports in Shenzhen has led to global shipping delays, while infections at key points in the chip supply chain in Taiwan and Malaysia are worsening a global shortage that has hit the aut…
@yifanxie @CostasParis @StephanieAYang @yoyominnie @JonathanEmont Meanwhile, Taiwan, home to one fifth of the world's chip manufacturing capacity, is suffering its worst outbreak yet. At one of its largest chip testing and packaging companies, some 200 employees have Covid, and a…