By Li Panpan

Shanghai's municipal governmental department released guidelines for industrial enterprises to resume production on April 16^. in response to widespread concerns about economic costs from the city’s stringent lockdown to contain the pandemic. About 60 IC manufacturing companies are on an official whitelist of some 666 companies to restart production, while the IC design companies still have to wait.

Image source: China Daily

Among the 60 IC companies to restart operation are HuaHong Group(华虹) and ACM Research(盛美半导体), and subsidiaries of well-known international companies like ASML and Applied Materials. The list is still being updated.

Shanghai imposed a city-wide lockdown on April 8 after the Omicron pandemic escalated in late March in the city, disrupting the supply chains in many industries. It appeared last week that production suspension and transportation bottlenecks were causing growing disruptions to the global supply chain. Many chambers of commerce, embassies, and other institutions, including the European Union and Japan, submitted proposals to the Shanghai government to adjust policies to keep a healthy and stable economic operation.

On the evening of the 16th, the Shanghai Municipal Commission of Economy and Information Technology issued the “Guidelines for Enterprises Resuming Work and Production in Shanghai amid Pandemic Control (First Edition)” to ensure the safety and stability of the industrial chain and supply chain. Many manufacturing enterprises that have stopped production due to pandemic control are expected to gradually resume work and production from April 18.

Shortly after the lockdown in Shanghai, China’s Ministry of Industry and Information Technology (MIIT) dispatched a front-end working group to Shanghai to work with local departments to ensure stable supply in the city.

MIIT vice minister Wang Jiangping said resources would be amassed to support production in the whitelist of 666 enterprises in critical industries such as semiconductors, automobile manufacturing, equipment manufacturing, and biomedicine.

However, judging from the list, the manufacturing industry is expected to take the lead in gradually resuming production. The IC design industry may have to wait for the next government work guidelines.

Shanghai is the most important city in China’s IC design industry. Its revenue reached RMB120 billion ($18.83 billion) in 2021, ranking first in the country. The Yangtze River Delta region with Shanghai as its center generated revenue of RMB238.3 billion ($37.39 billion) in IC design in 2021.

In the last article about Shanghai amid pandemic control, some IC companies JW Insights interviewed were worried about logistic problems. Now they have been affected, and others claimed to be affected to different degrees.

Xinyi Semiconductor(芯翼) vice president Li Jian said that working from home reduces work efficiency.

Some design companies in the mobile phone industry have to “slow down” with customers.

An RF front-end design company interviewee said, “we have customers in many parts of the country, including Shanghai, that are in lockdowns. It feels like everyone has slowed down.” But he also said that in the long run, the entire RF front-end market would continue to flourish with growing demand for RF chips in mobile phones, wireless devices, and the Internet of Things.

Logistics problems make chip delivery increasingly difficult for design firms. Several companies said that vehicle access was tightened in various places, and inter-provincial transportation was extremely difficult. Transportation costs have risen sharply, and companies need to spend a lot of workforce and financial resources to find vehicles and possible solutions.

There may already be some product inventory for some companies before the lockdown, but it is not enough to meet such a long-term demand.