By Mike Newlands
Major aftershocks following last Tuesday’s earthquake in Taiwan have set back any hope of getting the island’s electronics industry up and running again in the short term, and there is certain to be a big impact on supply and prices of semiconductors, other components and PCs.
Although most of the media focus on the business fall-out from the quake has centered on how the island’s wafer fabs are being affected, Taiwan is the world’s top producer of notebook computers, a major manufacturer of desktop PCs, and the main international source for many components and peripherals ranging from motherboards to scanners and CD-ROM drives. It is also rapidly becoming an important maker of TFT-LCD panels for notebook PC monitors, and international supply of these has yet to catch up with demand.
The main impact price-wise in the short term will be in the international market for 64MB DRAM chips. Surging demand for computers has already resulted in tight supply, and there has been a 30% price rise to a two-year high since the quake although Taiwan is only responsible for around 10% to 12% of world supply. But Taiwanese contract manufacturers also account for more than a third of the world’s supply of non-memory chips which are found in most IT and telecoms products.
Leading foundry manufacturer Taiwan Semiconductor Manufacturing Co says it will lose up to $7m each day its six plants are out of action. Estimates to the total impact on the island’s electronic industry range from hundreds of millions to billions of dollars.
Most of the island’s chip makers, and many of the other IT equipment manufacturers, are located in Taiwan’s Silicon Valley, the Hsinchu Science Park which is located in the one third of the island which has yet to have its electricity and water supplies reconnected. There are wildly-differing estimates as to when the supply can be online again, with residential areas being the top priority for Taiwan’s utility companies. Each aftershock puts the timetable back.
Even when power and water are restored, the factories will have to be sure the aftershocks are over before recalibrating sensitive equipment and getting the production lines running again. Those prepared to hazard a guess as to when production might start again have a variety of opinions ranging from the middle of next week to another four weeks.
The cumulative impact of losing up to several weeks’ production of not only DRAMS but also many other key computer parts and components and complete computer systems is likely to mean price hikes around the world as the pre-Christmas rush hits PC wholesalers and retailers.
