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Electronics

Sony and Panasonic keep Malaysia plants shut longer

Southeast Asia poses bottleneck in electronics supply chain

Sony Bravia OLED televisions are displayed during a Sony news conference at the CES in Las Vegas.   © Reuters

TOKYO -- The technology industry's supply chain faces the risk of a bottleneck in Southeast Asia, where Sony and Panasonic are keeping Malaysian factories closed longer than planned.

Sony had sought to restart Malaysian manufacturing facilities for televisions and audio equipment once the government restrictions on business activity expired -- originally set for Tuesday. But with the restrictions extended again for another two weeks, the electronics giant decided to postpone the reopening.

"A prolonged suspension may have an impact on supply," an employee said. The facilities have remained closed since mid-March.

Panasonic will stay shuttered in Malaysia until April 28. The suspension will hurt production of TVs for elsewhere in Asia, including Japan, and air conditioners for other Southeast Asian countries, the company said.

Sharp said it will keep TV production facilities in Malaysia closed until April 28. The Osaka-based company is a unit of Taiwan's Hon Hai Precision Industry, or Foxconn.

Shipments of electronic products and parts from Asia outside China reached $498 billion in 2019, accounting for 20% of the global supply and trailing only China's 40%, according to U.K. research group Informa. The region is responsible for more than half the global supply of desktop computers, 20% of LCD TVs, 70% of smartwatches and 70% of routers.

The technology industry breathed a sigh of relief as China began reopening factories. Activity remains robust so far in Japan, with 80% of top corporate leaders polled by Nikkei saying plants are running as usual even under a state of emergency for Tokyo and six other prefectures.

But concerns are growing that the Southeast Asian shutdowns will slow the sector's global rebound. The region is a production hub for home electronics and components, and manufacturers have spread different steps of supply -- from development to parts production and assembly -- across the world.

Renesas Electronics is now running three chip fabrication plants in Malaysia at less than half their usual utilization rates. The Japanese company is tightly managing workers authorized to come in, registering them in advance under government guidance.

The new coronavirus and the lockdowns by many countries will deal a serious blow to chip demand, said analyst Richard Gordon of U.S. research firm Gartner.

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