With COVID-19 infections surging in Malaysia, several ODMs are planning to shift orders from their plants in the Southeast Asian country to those in China and have obtained the approval from their clients, according to sources from the upstream supply chain.

Wistron and Inventec both have manufacturing plants in Malaysia with Wistron's in Port Klang and Inventec's in Penang. Both plants manufacture consumer electronics and IoT devices. Wistron also acquired a plant in Malaysia from Western Digital in 2020 and is planning to use the facility also for making IoT products.

Although Malaysia is currently in a national lockdown, production at the ODMs' plants is still at above 50% of the usual level at the moment, with the companies agreeing to follow the local government's epidemic prevention policies, the sources said.

Wistron originally expects the newly acquired plant to begin volume production in the second half of 2021, but has postponed the plan to 2022 due to the pandemic.

Inventec Appliances, a consumer electronics manufacturing subsidiary of Inventec, runs a plant in Penang, and ships around 30% of its production there to the US. Since the capacity at the plant has reduced because of the pandemic, several clients have already shifted some of their non-US-bound orders to Inventec's plant in Shanghai, China, the sources said.

Component shortages are also having a more serious impact on IoT and other consumer electronics as they are lower in priority than notebooks and servers at suppliers, the surces said. Currently, notebook shipments are around 20-30% short of orders, while the ratio for servers is around 10-30%, but IoT products now have a 30-50% gap, the sources added.