The continued pneumonia epidemic in Wuhan will directly impact Hubei, the mainland China’s production center for memory chips, displays, and PCBs, and will also affect the start of work in other provinces in the mainland while resulting in the “blockage” in the supply of three electronic key components. David Hsieh, the Research General Manager of IHS Markit’s Global Display Division, said yesterday (30) that TV manufacturers have initiated the “grab orders” battle on display factories to ensure smooth shipments, therefore, predicting the prices of TV displays to rise by $5-$6 this season.

 

    The top 2 display factories in mainland China, BOE Technology Group Co., Ltd (BOE) and China Star Optoelectronics Technology Co., Ltd (CSOT), as well as the leader of SME display manufacturer, Tianma Microelectronics Co., Ltd, have all set foot in Wuhan. David Hsieh noted that at present, the mainland’s display factories are requested to delay the start of work by the local governments. Without employees returning to the workplace, the supply of materials and the influence of South Korea and Taiwan’s mainland factories will also be affected as well. The decrease in the number of working days in February will further impact and reduce the capacity utilization rate of Chinese display plants by 15-20%.

 

    David Hsieh added that as the TV manufacturers have already determined their annual shipment plans, the dread of displays being out of stock has encouraged them to launch the “grab orders” act for additional orders. This phenomenon will drive the quotations of TV open cell displays to increase. This increase is estimated to rise by $1-$2 from the end of last year to a scale of $5-$6 dollars in Q1 2020.

 

    The share prices of Taiwan’s display factories fell suddenly yesterday. Both Innolux Corp. and Micro Crystal Co., Ltd registered a limit down. The share price of Radiant Opto-Electronics Corp., which is the backlight module factory, fell by $11.50, with a closing price of $103.50.

 

    Wuhan is a key memory chip manufacturing center in mainland China and is occupied by Yangtze Memory Technology Corp. (YMTCY) and Wuhan Xinxin Semiconductor Manufacturing Co., Ltd (XMC). A legal representative previously considered that the obstructed shipments from these two major memory chip manufacturers are beneficial to other memory chip factories, but it has been suggested that the shipments of NAND Flash and NOR Flash from these manufacturers are currently normal, so the impact is relatively small. Also, the global market share of these two companies is not high, so the technology factories can purchase these products from Micron Technology Taiwan (MTTW), Samsung, SK Hynix Semiconductor Inc., or other Taiwanese factories, such as Nanya Technology Corp., Macronix International Co., Ltd, Winbond Electronics Corp., etc., without worrying about the supply chain breakage.

 

    The memory chip factories are still observing the progress of the epidemic and are mainly concerned about the outbreak impact on the global economy and consumption, which would then slow down the recovery pace of memory chips. The share prices of Nanya, Winbond, and Macronix also decreased yesterday, all falling by more than 8% and the closing price of Winbond was $17.30.

 

    Currently, the industry and institutions forecast that the impact of the outbreak in Wuhan on the PCB and rigid board factories is higher than that of CCL material suppliers. Among the rigid board factories, the production size of Dynamic Electronics Co., Ltd has been subjected to the most substantial impact as it is the most concentrated in this region. The Taiwan-invested PCB manufacturers that have directly set up factories in the Hubei area include the Huangshi plant of Unimicron Technology Corp., the Xiantao plant of Tripot Technology Corp., and the Huangshi plant of Dynamic.

 

    The industry also pointed out that it is currently the off-season of the industry. Based on the start of work time being on the 13^th, approximately half of the month of February will be affected. The impact on Wuhan in the Hubei area will be even more severe. The traffic is relatively convenient in Huangshi and the distance from Huangshi to Xiantao and Wuhan is only approximately a one-hour drive away from the region.

 

The analysts estimated that the profit of the Huangshi plant of Unimicron in Q1 2020 was only 0.36%, as affected by local transportation, and that the profit of the Xiantao plant of Tripot is only 1.76%. The shipment delay of the Huangshi plant of Dynamic will cause a profit impact as high as 22.64%. (Source: Economic Daily News）