Broadcom tells customers to anticipate six month lead time

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April 17—Broadcom recently told its customers it would need at least six months of lead time to fulfill new orders, reports Bloomberg. The corporation, which is a supplier for Apple, Samsung, and Amazon, is facing delays because of lockdown orders affecting its factories in Malaysia and other regions.

The firm’s April 13 supply chain notification follows its March withdrawal of annual revenue guidance.

Broadcom’s Coronavirus Related Production Delays

Like many chipmakers, San Jose, California-based Broadcom maintains production capacity throughout Southeast Asia because of the region’s affordable labor costs. As such, the firm’s diverse supply likely helped it in the early days of the coronavirus outbreak after Beijing shuttered mainland manufacturing plants.

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However, the company’s vice president of sales, Nilesh Mistry, said the pandemic’s spread to Malaysia, the Philippines, Singapore, and Thailand is “severely restricting” its business operations. As such, Broadcom is now telling its clients their orders will take 26 weeks at minimum to deliver as opposed to the standard two to three months.

The manufacturer told its customers its air and sea transportation resources becoming unreliable and more expensive caused the delays. Last week, the firm issued a bond offering in which it laid out another problem; its Malaysian assembly and test subcontractors have been shut down. The company warned that if it has to source its chip packaging elsewhere, its ability to ship products would be “severely limited.”

Broadcom also noted a warehouse it maintains in-country could become inaccessible if Kuala Lumpur increases the scope of its lockdown.

Wider Implications

Broadcom provides Apple and Samsung with smartphone networking components. Consequently, the chipmaker’s production and logistics problems could have a knock effect on handset availability during the holiday season.

Last month, Apple’s processor and PCB suppliers said they would have no problem mass producing components for the 5G-enabled iPhones. However, Broadcom’s production issues could prompt the Big Tech giant to delay its smartphone rollout from its expected September launch. Similarly, Samsung might not be able to manufacture enough A-series smartphones to take advantage of holiday quarter purchasing spikes.

In addition, Broadcom provides Amazon, Huawei, and Cisco Systems with switch chips. Therefore, the manufacturer’s supply chain problems could affect both the global 5G deployment and other data infrastructure build-out projects.

COVID-19’s impact on Southeast Asia is hurting more than one prominent chipmaker. Ibiden Co. Ltd., Murata Manufacturing, and Renesas Electronics Corporation shuttered its Malaysian facilities in compliance with government quarantine mandates. Also, Cypress Semiconductor closed its Philippine packaging site in response to a movement restriction decree.

Hopefully, public efforts to contain the coronavirus outbreak will succeed before its adverse effects become even more widespread and long-lasting.

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