Taiwan chip fabs safe after earthquake

TAIWAN was hit by a 6.4 magnitude earthquake the other day but it looks like most of its IT industry is still functioning okay.

Chipmakers in the Far East are suffering at the moment trying to get out chips in a period of high demand and low supply. They are also suffering from a skilled staff shortage.

Fears that the industry might get a bit shakier if a plant or two fell down in the quake seems to have prompted a ring around by analysts at Isuppli.

Parts of the Tainan Science Park area were closed down due to safety concerns.

Chipmakers TSMC and UMC reported that production was interrupted but estimated their lost production time at only about one to one and a half days, according to Digitimes.

Worst hit were the makers of large panel TVs and monitors. Not all of their production facilities were shut down, but the panel suppliers known to be impacted by this production stoppage accounted for 16.4 per cent of global shipments of large-sized LCD panels in January.

Chi Mei Optoelectronics (CMO) and Hannstar Display stopped manufacturing large-sized LCDs at their Tainan fabs. In January, CMO was the world's fourth-largest producer of large-sized LCD panels, accounting for 13.3 per cent of global unit shipments. HannStar was the seventh-largest producer, with a share of three per cent. So far there is no news about supplier AU Optronics, which is the number three suppler.

Sweta Dash, senior director of LCD research at Isuppli said that the Taiwan earthquake could have strong impact globally on large-sized LCD panel supply, depending on how quickly production is resumed at the Tainan facilities.

After a shutdown, it typically takes 12 to 24 hours before production can be restarted at an LCD manufacturing fab. However, if there is damage to the equipment, the shutdown will last longer.

Fortunately for the LCD makers the production disruption comes at a time when shipments are typically slow, supply is starting to exceed demand and inventories are increasing in the retail channels due to slower than expected sales in January and February.

The earthquake also has halted Tainan's production of glass, the main component used to make LCD panels. Avanstrate, a small supplier that accounts for about five per cent of global glass supply, operates five glass melting tanks in Tainan. Initial reports indicate severe damage the company.

Leading global LCD glass supplier Corning said there was no damage to its Tainan LCD glass operations and that all glass-making operations recovered within hours and now are running normally. µ