Wuxi Fire Causes Further Semiconductor Disruptions
All semiconductor chip production activity was suspended in the Wuxi Welnew Factory in China after a fire broke out on January 6. There were no reported injuries; however, there will be severe delivery interruptions for numerous manufacturers.
What components are impacted?
This factory supplies to numerous major semiconductor manufacturers as a sub-tier supplier, and while not all have been affected, a few of the biggest names in semiconductor production have seen significant setbacks. The other most impacted commodities include MOSFETs, RF Small Signal, and LED Drivers. Additionally, Wuxi is a key manufacturer of packaging, where production will be suspended.
Who is impacted?
It could take months for the production of these commodities to return to normal, as we are still seeing impacts more than a month later. While affected companies are working to mitigate the effects and risks, the impacts to semiconductors, MOSFETs, RF Small Signal, LED Drivers, and packaging will continue to be felt. Industries like the automotive industry, consumer electronics, and numerous other sectors may continue to be impacted.
How does it strain the seemingly recovering market?
This will only add to the tension that the semiconductor industry has undergone in the last three years. They have experienced significant shortages as global disruptions occur more frequently than ever before. Between the war in Ukraine causing shortages for neon gas and the shortage of chips to build semiconductor manufacturing equipment, it certainly seemed as if the industry would never stabilize again. In fact, in 2022 alone, almost 17% of obsolete parts were attributed to semiconductors (Source: Internal Data from SiliconExpert). Despite this, we are now seeing pockets in which semiconductors are still in an extreme shortage. On the other hand, some areas are experiencing a glut of the chips.
Additionally, the fire causes further disruption in the automotive industry, which has already been battling obsolescence. With ELM having closed their doors and ICEs being difficult to locate, MOSFETs and LED Drivers will now be short as well impacting the automotive industry significantly.
Moreover, packaging protects parts and is vital once all of these parts are manufactured. When packaging such components, it is essential to ensure the highest quality and component resilience to withstand any number of strains (ex: water, humidity, sunlight, shock, etc.). In order to do this, manufacturers need to know the specifications for each unique product. This allows them to ensure the highest quality, while remaining cost-efficient. The temporary closure of the Wuxi Welnew Factory will impact this high-reliability and high-specialization corner of the electronics supply chain.
What actions should companies take?
As we continue to monitor the impacts of this fire, we anticipate numerous long-term effects yet to come. As always, we will continue to provide updates and support for affected companies. In situations like this, it is necessary to keep in touch with your commodity managers who have the strongest pulse on all aspects of the market.
To learn more about how this incident could impact your industry, CONTACT YOUR CONVERGE REPRESENTATIVE TODAY.
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Latest Updates: Wuxi Welnew Factory Fire Suspends Production