Business continuity during the pandemic with SMC Automation
October 11, 2022
As borders worldwide start to reopen, Malaysia revives the EMAX and PMAX Expo in Penang last July 2022. During this event, Chip1 Media sat down with Edwin Haw, General Manager and Director of SMC Automation Malaysia, to get his thoughts on what transpired during the last few years in the industry.
Let’s quickly unpack what was shared during our discussion with Edwin Haw.
First, who is SMC Automation Malaysia? They are a factory automation solutions provider that has been around since 1976; that’s an astounding 44 years and counting! With borders opening up and COVID protocols easing, the world is ready for the world economy to return to normal.
With Penang’s ecosystem driven by a significant percentage coming from the manufacturing sector, reopening the EMAX and PMAX expo is a welcome glimpse back into the days before COVID turned the world upside-down.
Haw talks about how SMC Automation adapted during the COVID-related lockdowns by going online to ensure business continuity with their key customers, an effort resonated with many others throughout the pandemic.
Like the rest of the world, many imports and exports were affected, causing further extensions in lead times of materials and, inevitably, higher costs, primarily due to the mandates that shut down many operations to contain the aggressive spread of COVID.
Then by February 2022, the delicate state of the supply chain was further exacerbated by Russia’s invasion of Ukraine, and in what is still an ongoing war, many raw materials in the semiconductor sector relying on supplies coming from both Ukraine and Russia have led towards straining an already choking supply chain. Logistics providers worldwide had to reroute their flight paths and delivery routes to avoid flying over conflicted air space, all amidst an ongoing pandemic.
In response to this economic crisis, the Malaysian government, through MIDA (Malaysia Investment Development Authority), developed a few programs to support their budding manufacturing sector.
One such program encourages local manufacturing firms to localize their supply through the local sourcing facilitation program of MIDA. Similar to programs like that in the U.S., the diversification and localization of sourcing help lessen the dependence on other countries to supply key raw materials and keep products flowing into shelves and, eventually, into consumers' shopping carts.
Not only does this give manufacturers in Malaysia more flexibility to keep production lines moving, but it also provides a much-needed boost to a local economy that has undoubtedly suffered financially during the pandemic.
Another program saw the upskilling of laborers and staff to be able to cope with a more digital and remote workplace brought about by COVID restrictions. This included training and technology adoptions to keep the workforce up to date, albeit remotely. Haw also describes how MIDA encouraged small local businesses to provide their products and service to the SMEs and MNCs within Malaysia to boost the ecosystem. This move allows Malaysia’s smaller startups to gain traction by servicing the needs of larger and multinational corporations. A good move to keep the Malaysian economy intact and ensure companies can survive the pandemic's negative financial impacts.
MIDA has also been very active in promoting investments. In 2020, MIDA attracted nearly RM64.8 billion worth of investments in the manufacturing, service, and primary sectors, thus creating over 1,700 projects and 37,000 job opportunities within Malaysia. Many of the Malaysian efforts focused on strengthening the local business ecosystem.
Nearly 70% of those investments were domestic direct investments (DDI), while the remaining 30% were foreign direct investments (FDI). Of course, the largest of these investments went into the manufacturing sector, contributing more than half of the investments, roughly RM35.7 billion or US$7.85 billion going into manufacturing alone.
Haw then talks about how Malaysia should also modernize its ports, inspired by Singapore’s monumental announcement of a $14 billion investment to build a mega port by 2040. One that will be highly automated and meant to ease the supply chain issues today. Haw believes the modernization of their ports will keep Malaysia competitive.
MIDA’s efforts to push Malaysia’s business ecosystem further seem to be paying off as the agency recently signed with logistics giant, Maersk, to help turn Malaysia into a competitive regional logistics hub, a step towards the same direction that Haw envisions for the country to progress.
Looking onwards to 2023
The good news here is that the outlook for this year looks promising.
Globally, the electronics market is expected to grow to $3,521.21 billion in 2022 with a compound annual growth rate (CAGR) of 10%. Driven by emerging technologies in 5G, IoT, and electric vehicles, this boom, as resonated by Haw, should continue to drive growth in 2023. The chip shortage, however, isn’t completely gone. The world is slowly recovering from COVID, and business is normalizing.
Although the capacity of most semiconductor manufacturers like Intel, Samsung, and others has improved after a series of investments, there will still be lingering issues within the supply chain. However, the strain is slightly improved due to the actions of many big players and governments to mitigate the impacts of this shortage. Suffice it to say, the industry isn’t entirely out of the woods just yet, especially with geopolitics currently still in play.
In the meantime, feel free to explore your semiconductor needs through Chip1 Exchange and visit our website, https://www.chip1.com/. Follow us on Facebook, Instagram, LinkedIn, and YouTube.
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