Middle East Tensions Disrupt Semiconductor Supply Chain: Malaysia's ATP Sector Partially Insulated Amid Mixed Risks – Maybank Analysis

Rising Middle East tensions are posing mixed risks to the global semiconductor supply chain, with potential disruptions in energy and critical gases.

Maybank reports that Malaysia's concentration on assembly, test, and packaging (ATP) provides partial insulation from immediate supply shocks.

Taiwan's High Exposure to LNG Shortages

Taiwan faces significant risks as LNG fuels 47% of its electricity, sourced largely from imports with only 11 days of reserves.

The complete decommissioning of nuclear power in May 2025 has removed a key buffer, potentially halving electricity output during prolonged disruptions.

South Korea demonstrates greater resilience with 52 days of LNG reserves, 31% nuclear generation, and lower reliance on Qatar for imports.

However, helium supply remains a critical shared vulnerability, with South Korea sourcing 65% from Qatar's Ras Laffan facility essential for chip fabrication processes.

Indirect Pressures on Malaysia and Future Outlook

Disruptions along the Strait of Hormuz and Red Sea could drive up oil prices, escalating logistics and raw material costs for Malaysian EMS firms.

EMS companies are particularly susceptible due to thin margins and limited cost pass-through ability, while service firms show more resilience.

Medium-term, upstream output issues in Taiwan and South Korea may delay capital expenditures and dampen demand for Malaysian ATP services.

Despite cyclical pressures in legacy segments, robust AI and data center demand supports uneven growth in Malaysia's sector.

Maybank upholds a neutral stance, emphasizing compounding risks from simultaneous LNG and helium disruptions rippling downstream.