Technology Dell, Amazon supplier halts Taiwan production amid omicron fear

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TAIPEI -- Compal Electronics, a supplier to Dell and Amazon, is halting production at its factory in northern Taiwan for a week after several employees tested positive for COVID-19 as the latest wave of the omicron variant spreads in Taiwan.

The world's No. 2 contract notebook manufacturer said it will suspend manufacturing activities at its plant in Pingzhen in Taoyuan City -- one of Taiwan's key industrial hubs -- after three employees tested positive, according to a stock exchange filing on Monday night.

The company said it has tested all of its 1,800 staff and suppliers who visited the plant recently. The weeklong production halt will impact full-year revenue by less than 0.1%, it noted. Compal generated 1.23 trillion New Taiwan dollars ($44.6 billion) in revenue in 2021.

"We will assess the situation and will leverage our overseas capacity, such as in Vietnam, to support the Taoyuan factory if it is necessary," a Compal spokesperson told Nikkei Asia.

This is the first time in several months for a large tech manufacturer in Taiwan to halt production over COVID fears. The tech-reliant economy has seen a surge in infections over the past few weeks, with Taoyuan at the center of the latest wave.

The city is home to the headquarters of numerous global companies, including leading printed circuit board maker Unimicron, and the world's biggest notebook contract manufacturer Quanta Computer. The city is also close to Hsinchu, Asia's key semiconductor hub, where Taiwan Semiconductor Manufacturing Co. and United Microelectronics are based and operate large production facilities.

TSMC stepped up preventative measures from Monday, including dividing staff into separate teams to reduce contact and suspending all visits by outsiders to the company.

Compal is a key manufacturer of the iPad and Apple Watch, Google's Pixel phone and Amazon's Echo smart device. Its Taoyuan plant counts Dell as one of its major clients that hold government contracts to supply notebook computers, though the factory also makes a small volume of Internet of Things connected devices and industrial computers.

Foxconn, the world's largest contract electronics manufacturer, told Nikkei Asia that it already stepped up its COVID prevention measures in Taoyuan from the first week of January, including suspending the movement of employees between different factories. "We also suspended visits of external visitors and closed gyms last week," a Foxconn spokesperson added.

Quanta Computer, which is headquartered in Taoyuan and has thousands of employees in the city, told Nikkei Asia that from Monday it has escalated its COVID prevention measures -- similar to those it took when Taiwan was under semi-lockdown last summer -- such as closing all public spaces, halting external visits and holding all meetings virtually.

About 72.3% of Taiwanese people were fully vaccinated and 80.7% of the population had at least the first shot as of Jan. 16, according to the latest available data from Taiwan's Centers of Disease Control. Nearly 7% have received a third dose as a booster.

Taiwan has been seen as global success in terms of its pandemic response, with 17,885 cases of the virus and 851 deaths since the outbreak began in early 2020, according to the Policy Research Indicators Database as of Jan. 17.



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