Tech firms at Malaysia's one-time Silicon Valley of the East, swimming in orders from customers fleeing trade war-hit China, have seen fortunes turn again in the space of just a year as the coronavirus outbreak cuts them off from Chinese suppliers.
Semiconductor test equipment manufacturer Pentamaster Corp Bhd saw its shares more than double last year as sales surged by about a fifth - the steepest in its 29-year existence - as the firm became a refuge from Sino-U.S. import tariffs.
But then China sent workers home to slow the virus, stifling supplies of parts and material further upstream. Pentamaster called alternative sources in Japan, South Korea, Germany and Italy, only to find the action had left them in the lurch too.
The firm has since lowered its 2020 revenue growth outlook to flat from double digits, while its stock has fallen more than 10% since China in late January locked down the virus epicentre, Wuhan.
"Even if you source from another country, the other country also depends on China," said Pentamaster Executive Chairman Chuah Choon Bin.
Pentamaster's predicament is echoed across Malaysia's coastal state of Penang, one of the world's biggest electronics and electrical hubs, which had been losing business to China for the past decade until the trade war sparked a revival.
Home to factories owned by Intel Corp and Broadcom Inc alongside numerous other firms that supply tech majors including Apple Inc, the state accounts for about 8% of global back-end semiconductor output.
Inbound investment reached a historic high last year. This year, however, the goal is just a third of that, at about $1.2 billion - though that is due to the life cycles of investments rather than the virus, the state government said.
ROLLER COASTER
The roller-coaster ride illustrates how quickly and broadly the virus is changing fortunes around the world.
While Penang firms saw record sales last year from customers seeking to curb reliance on China and escape U.S. tariffs, they themselves relied on China for as much as 60% of components and materials with the rest coming from Europe or elsewhere in Asia.
Analysts and local firms said the virus' sales impact would be acute in the April-June period when stockpiles run out. While many firms have warned of delays, some have seen orders surge as customers continue to seek suppliers outside of China.
"Good news: Product transfers from China are leading to more quotation requests and order overflow," said Goh Guek Eng, managing director at semiconductor products assembler Hotayi Electronic. "Bad news: Materials are not coming in from China."
Hotayi sources 60% of components such as printed circuit boards and multi-layer ceramic capacitors from China, for customers including Samsung Electronics Co Ltd, LG Electronics Inc and Sharp Corp.
Its sales soared 40% last year. Goh said its 20% target this year could be at risk due to the supply issues, which could turn critical in one to two months' time and badly hit production.
Pentamaster buys most of its components such as motors and sensors from Japan, Europe and China - the latter making up 20% to 30%. In the past few weeks, it has changed the design of some equipment to accommodate parts from outside China, Chuah said.
"We're able to get supplies but the lead time is long - two to three months from Europe," he said, compared with two to three weeks from anywhere under normal circumstances.
Analysts said other firms likely affected by the supply disruption include electronics manufacturing services companies VS Industry Bhd and ATA IMS Bhd as they rely on China for up to 30% of components and material. Neither responded to Reuters' requests for comment.
Semiconductor company Inari Amertron Bhd, whose radio frequency components are used in smartphones including Apple's iPhones, might have a weak second half after the U.S. firm flagged slowing production and demand in China, Malaysia's AmInvestment Bank said.
Inari told Reuters the virus had indeed had an impact on its supply chain but "probably less than the market feared" as the situation in China was improving.
"We expect our performance to be in line with the overall growth, resilience or lack thereof, in the global semiconductor market," said Vice Chairman Tan Seng Chuan.
Globetronics Technology Bhd, a contract manufacturer of semiconductor-based products, told Reuters it did not directly source from China but that there was a small risk to its indirect supply chain.
"We had previously forecast the year over year growth for all semiconductors to be 5.5% in 2020," said Kevin Anderson, senior analyst for power semiconductors at consultancy Omdia. With the virus, "now we think the range could be from -20% (worst case) up to 2.5% (best case), with a most likely of -3%".
"All this depends very much on impact on the demand side as the virus spreads around the world and how quickly the electronics supply and logistics chains recover."
Qdos, which makes flexible printed circuit boards and caters to five of the world's 10 biggest smartphone makers, cut its sales growth outlook to "the low tens" from 20% forecast last year, said Group Chief Executive Jeffrey Hwang.
"The supply chain in electronics and semiconductors is really long, so one way or another you touch China," said Hwang, whose company also has a factory in the Chinese city of Xiamen.
"China is a big supply chain that has served the world really well, so companies will not stop going to China entirely but probably they will cut down on dependence on China alone."
Reuters
Tue Mar 10 2020
Penang had been losing business to China for the past decade until the trade war sparked a revival. A general view of Penang skyline, Malaysia, Sept. 20, 2019. REUTERS/Lim Huey Teng
Pengarah syarikat dakwa pemilik RM500,000 beri keterangan esok - Ketua Polis Selangor
Pengarah syarikat yang mendakwa pemilik bagasi berisi wang RM500,000 yang ditemukan di tempat letak kereta dijangka hadir memberikan keterangan esok.
Bernas ceriakan Aidilfitri pesawah asnaf
Padiberas Nasional Berhad (BERNAS) menceriakan 45 asnaf dan komuniti pesawah sempena Aidilfitri tahun ini.
Inisiatif Gema Ramadan Menyantuni Penuh Ikhlas adalah sebagai inisiatif untuk menyumbang kepada masyarakat dengan menekankan fokus strategik ke atas impak yang lebih bermakna, melangkaui Tanggungjawab Sosial Korporat semata-mata.
Inisiatif Gema Ramadan Menyantuni Penuh Ikhlas adalah sebagai inisiatif untuk menyumbang kepada masyarakat dengan menekankan fokus strategik ke atas impak yang lebih bermakna, melangkaui Tanggungjawab Sosial Korporat semata-mata.
[TERKINI] Mahkamah Tinggi arah Isa dan Emir bayar RM3.31 juta
Mahkamah Tinggi Kuala Lumpur memerintahkan Tan Sri Isa Samad dan Datuk Mohd Emir Mavani Abdullah membayar lebih RM3.31 juta kepada FGV Holdings Berhad.
KJ akhirnya dapat isi PADU selepas identiti dicuri
Khairy Jamaluddin akhirnya berjaya mendaftar dalam sistem PADU selepas mendakwa akaunnya telah didaftarkan oleh individu yang tidak dikenali.
Tiada kemunculan Amad, pertemuan Man United-Brentford
Kedua-dua pasukan Manchester United dan Brentford kehilangan seorang pemain kerana penggantungan untuk pertembungan Liga Perdana Inggeris Sabtu ini.
Singgah Sahur UMPSA santuni anak yatim, agensi keselamatan
Program Singgah Sahur UMPSA bukan sekadar bertujuan berkongsi rezeki, tetapi juga menjentik rasa keinsafan dan kesyukuran.
Sarawak Energy kini penaung Majlis Tenaga Dunia, pertama dari Asia Tenggara
Sarawak Energy secara rasmi menjadi penaung global Majlis Tenaga Dunia, sekali gus menjadikannya yang pertama dari rantau Asia Tenggara.
Dua lelaki tak mengaku rompak, menyamar polis
Dua lelaki dihadapkan ke Mahkamah Sesyen Seremban pada Jumaat atas pertuduhan melakukan rompak berkumpulan terhadap seorang lelaki, minggu lalu.
Pembinaan LRT Pulau Pinang tidak melibatkan tanah yang banyak
Menurut Menteri Pengangkutan Anthony Loke Kerajaan Negeri P.Pinang telah kenal pasti jajaran tersebut dan meminimakan pengambilan tanah dan tidak melibatkan bangunan-bangunan yang banyak.
Kemalangan: 45 maut kemalangan bas di Afrika Selatan
Seramai 45 maut dan seorang cedera parah selepas terlibat dalam kemalangan bas berhampiran Mamatlakala di wilayah utara Limpopo, Afrika Selatan, pada Khamis.
Piala Thomas: Rexy tidak mahu insiden di BATC 2024 berulang di Chengdu
Pada saingan BATC, skuad lelaki mengalami detik mencemaskan selepas Lee Zii Jia dan Ng Tze Yong terpaksa direhatkan bagi beberapa perlawanan.
Hampir separuh penyelidik AI terbaik dunia berasal dari China
AS mengekang akses kepada cip terkini China bagi memastikan status sebagai negara dengan kemajuan teknologi terkini tidak akan dipintas.
China gesa Filipina henti pencabulan, provokasi di Laut China Selatan
Tentera Filipina pada Sabtu dakwa kapal pengawal pantai China menggunakan meriam air terhadap kapal bekalan Filipina di Laut China Selatan.
Penerbangan terus Shanghai-P.Pinang rangsang industri perniagaan, pelancongan negeri
Juneyao Airlines yang berpangkalan di Shanghai menawarkan empat penerbangan setiap minggu antara kedua-dua bandar berkenaan.
TikTok dianggar bernilai ASD100 bilion
Walaupun Bytedance bertegas akan menentang RUU ini jika diluluskan, beberapa kumpulan pelabur di Amerika Syarikat bersedia untuk membelinya.
PKS Malaysia sertai CISMEF, pameran PKS terbesar di China
Malaysia akan menjadi negara hos bersama CISMEF tahun ini dalam usaha mempercepatkan akses pasaran PKS Malaysia di China.
Pilih Malaysia sebagai hab, tembusi pasaran lebih luas - PM
Malaysia punya dasar ekonomi yang jelas dan berupaya sediakan segala fasiliti perniagaan bagi membantu lonjakkan pulangan ekonomi yang baik.
China bidas AS lulus RUU haramkan TikTok
Tindakan meluluskan RUU pengharaman TikTok adalah seperti membuli dan akan kembali 'menggigit Amerika Syarikat' sendiri.
AS lulus RUU haramkan TikTok
Dewan Perwakilan Amerika Syarikat (AS) yang bersidang pada Rabu meluluskan Rang Undang-undang (RUU) yang mengharamkan penggunaan aplikasi media sosial TikTok yang dibangunan China di negara itu.
'Malaysia jadi pilihan industri semikonduktor global di tengah perang perdagangan AS-China'
Malaysia dilaporkan muncul sebagai destinasi yang tidak dijangka untuk industri semikonduktor global.