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Taiwan claims Malaysia's assistance is required to resolve chip shortages.

According to Taiwan Economy Minister Wang Mei-Hua, resolving the global scarcity of auto semiconductors requires Malaysia's assistance, particularly in packaging, which is impacted by the country's COVID-19 restrictions.

As a major chip producer, Taiwan has been at the forefront of efforts to remedy the shortfall, which has caused car facilities all over the world to shut down.

In Thursday’s interview at her ministry that Taiwan could not solve the problem on its own since the supply chain is so complicated.

"The bottleneck in fact is in Southeast Asia, especially Malaysia, because for a while the factories were all shut down," she said.

The situation was particularly apparent in the case of car chip packaging, with Malaysian companies providing services that Taiwanese competitors did not, according to Wang.

"Now the focus is on Malaysia resuming production as soon as possible. I know that Malaysia started to restore production capacity in early September, and now the production capacity has returned to about 80%, so if their capacity can slowly come back, this problem can be slowly dealt with."

Malaysia is home to suppliers and facilities that serve semiconductor companies like STMicroelectronics (STM.BN) and Infineon (IFXGn.DE) in Europe, as well as major automobile manufacturers like Toyota Motor Corp (7203.T) and Ford Motor Co. (F.N).

Malaysia is responsible for 13% of global chip packing and testing, as well as 7% of global semiconductor commerce, with some value-added at local manufacturers and chips being integrated with other parts before final export.

After a jump in COVID-related demand, global demand for Malaysian chips is still outstripping supply. An industry executive claimed in August that 19 cases delayed production at a time when car companies, phone companies, and medical equipment manufacturers are ramping up production.