The country accounts for 13% of global chip packaging and testing, and 7% of the world’s semiconductor trade passes through Malaysia

Resolving the global shortage of auto semiconductors needs Malaysia’s help, especially when it comes to packaging, a sector affected by the country’s COVID-19 curbs, Taiwan Economy Minister Wang Mei-hua said.

As a major chip producer, Taiwan has been front and centre of efforts to resolve the shortage, which has idled auto plants around the world.

Speaking in an interview late on Thursday at her ministry, Wang told Reuters that Taiwan alone could not sort out the problem because the supply chain is so complex.

The bottleneck in fact is in Southeast Asia, especially Malaysia, because for a while the factories were all shut down, she said. The problem was especially acute with auto chip packaging, with companies in Malaysia providing services not offered by Taiwanese firms.

Now the focus is on Malaysia resuming production as soon as possible. I know that Malaysia started to restore production capacity in early September, and now the production capacity has returned to about 80%, so if their capacity can slowly come back, this problem can be slowly dealt with, she said.

Malaysia is home to suppliers and factories serving semiconductor makers such as Europe’s STMicroelectronics and Infineon, as well as major carmakers including Toyota Motor Corp and Ford Motor Co.

The country accounts for 13% of global chip packaging and testing, and 7% of the world’s semiconductor trade passes through Malaysia, with some value added at local factories and chips getting combined with other parts before final shipment.

Global demand for chips from Malaysia is still outstripping supply after a surge in COVID-19 cases disrupted production at a time when car firms and makers of phones and medical equipment are ramping up their output, an industry executive said in August.