While the COVID-19 epidemic continues to intensely proliferate, the Chinese National Federation of Industries (CNFI) recently stated that Taiwanese plants in China could be challenged with a chain-rupture crisis in March. The Ministry of Economic Affairs (MOEA) has also made regular contact with the Taiwanese plants in China since the Chinese New Year and had previously planned to provide reports on Taiwan factories’ operation status. However, since the information of the individual manufacturers’ varying situations may be disclosed given the current situations, a report has not been provided yet.  

 

          MOEA officials stated that it is difficult to reach a comprehensive generalization because the measures of a city shut down in the different provinces and cities of China are not exactly similar, besides the fact that the position of each factory and their labor force composition are so diverse. For now, the ministry has suggested that approximately 30% of the plants have resumed work, while the longer supply chain of the electronics industry has generally been more considerably affected.

 

        The officials have also described that the semiconductor industry has not been affected much since the key production capacity is mostly completed in Taiwan, according to the outcomes of the current industry information. However, there could be an order transfer effect in the panel industry. Regarding mobile phone assembly, if its foreign production capacity can be suitably adjusted, the damages will be minimal. However, the shortage of materials could be fairly serious. In terms of PCB production, the situation is barely optimistic and the Netcom industry would have to rely on the extent of its production capacity that it can bring back to Taiwan. Essentially, the greatest challenge that certain other industries are currently experiencing is not when to resume work, but the decreasing demands in China, including petrochemicals and machine tools.

 

        Though, these officials have emphasized that the situation including different manufacturers in the same industry could be “very different". Regarding the management measures for a city shutdown in China, employees from other provinces need to be isolated for quarantine. But, those from the province don't require quarantine if they are from the same industry in the same location. As such, it is evident that different labor arrangements may have impacted the work resumption rate.

 

          MOEA officials further examined three stages that are particularly vital for Taiwanese plants in the mainland. The first is the situation regarding the resumption of work after the 24th. Though most of the provinces and cities in China have continued work on the 10th, traffic has not been reestablished, so employees would still have to be isolated for 14 days in quarantine before they begin working again. In this case, most personnel have not continued on the production lines and is the reason why we have to determine if signs for the resumption of work can be observed on the 24th.

 

          The second stage is the beginning of March. By then, we have to determine if the chain-rupture effect will occur in the electronics industry. In fact, some manufacturers from the electronics industry have suggested that their materials may only be available until the end of February. In this case, if traffic blockades continue, there won't be any materials available in March and this may impact production.

 

          Regarding the third stage, the officials revealed that while many large factories have returned to Taiwan in 2019, some Taiwan factories have continuously considered moving their production capacity out of China because of the epidemics and/or customer requirements. However, most factories are still working hard for the start of work, so that the planning and applications projects may be realized by mid-2020 (News source: Liberty Times)