‘They’ll have to pay’: Malaysia chip crunch triggers new era in supply deals
- Customers accept take-or-pay, longer contracts -assembly firm
- Many suppliers in Malaysia still not running at 100% capacity
- Plant operators cautious on risk of COVID shutdowns, costs
- Shortages likely to continue 2-3 years – chip industry executive
KUALA LUMPUR, Oct 20 (Reuters) – Malaysian electronics firms central to the supply of basic chips that drive the world’s cars, smartphones and home devices say big-name customers are beating on their doors to lock in take-or-pay, longer-term deals – and happy to pay more if need be.
Manufacturers are rushing to replenish chip stocks depleted during coronavirus pandemic factory curbs – not least automakers who earlier cancelled orders expecting poor demand. That chip shortage has slammed their output, and still dislocates supply chains, just as consumer demand ramps up along with a global easing of COVID restrictions in everyday life.