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Taiwan earthquake to hit components supply

Taiwan earthquake to hit components supply

As the rescue and clean-up efforts continue in Taiwan after the devastating earthquake which rocked the country last Monday, businesses throughout the US are experiencing mounting concerns over the economic impact of the disaster.

Most companies' first concerns were for the safety of their employees in Taiwan, where 1700 lives have been lost in the quake as the death toll continues to climb. But also on their minds are the extensive manufacturing facilities within Taiwan, particularly six new LCD manufacturing plants that are currently under construction.

"It is too early for us to tell [what the impact will be]," said John Thompson, a Dell spokesperson in Austin, Texas. "We are focusing on the people and communicating with our people there. It appears that we are probably in good shape, and that is the first priority. We have a team assembled to assess any possible business impact it will have, but it is too early to tell."

Taiwan is well known for its ability to mass produce electronic goods and has recently been saddled with the responsibility for pulling the computer market out of a worldwide shortage of LCD screens.

Six new fabrication plants were scheduled for opening over the next 18 months, which would have alleviated much of the pricing pressure now strangling the market. But the earthquake leaves a large question mark as for the timing of those plants and is a harbinger of further constriction of supply.

Taiwan boasts one of the world's fastest-growing chip manufacturing clusters in the Hsinchu Science-based Industrial Park. Early reports suggest that the park's manufacturing facilities suffered limited structural damages.

Power outages, however, continued and it could be until this week before electricity supplies return to normal throughout the island, according to authorities in Taiwan. Communications were hit hard by the quake, with power outages knocking out many telephony systems, including some base stations for mobile phones and computers for Internet access, the sources said.

Taiwan Semiconductor Manufac-turing, the world's largest contract chip manufacturer, said in a statement that the company's buildings, water and power distribution systems had successfully withstood the effects of the quake. TSM's Hsinchu facilities were operating on standby power at the time, however, and the company said that once power has been fully restored it expects to be able to better assess the full impact of the quake on wafer production.

General Semiconductor announced the day after the quake that its Taipei factory sustained no major damage and was expected to return to normal production. Power had been restored, equipment recalibrated, and processes recertified, the company said.

"General Semiconductor has also been assured by suppliers that all important materials for the business have been secured, providing assurance that the needs of its customers will be met," the New York-based chip manufacturer said in a statement.

How the ongoing power outages will affect supplies of PCs and related products remains to be seen.

Taiwan is the world's third-largest manufacturer of PCs and related products, according to estimates by the Market Intelligence Center, the market research arm of the Institute for Information Industry.

The total value of IT hardware products manufactured by Taiwan-based companies in 1998 reached $33.6 billion, of which about $19.2 billion was from domestic production and the remaining from offshore centres mainly in China and Southeast Asia.

"A lot of things are made in Taiwan, and you've got to imagine that a lot of those factories, if they haven't been destroyed, must be out of commission," said Bob O'Donnell, an analyst at IDC. "We just don't have enough data yet, but it could be huge."


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