Taiwan semiconductor

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9/28/99 -- 4:25 PM Taiwan's chipmakers shaken but recovering from quake HSINCHU, Taiwan (AP) - Working quietly in a sterile, temperature-controlled environment, the microchip makers dressed in white moonsuits belied the sense of urgency gripping Taiwan's crucial semiconductor industry.

The chipmakers are struggling to bounce back from the worst shock in the industry's nearly two-decade history - a powerful earthquake that threw plants into blackness and temporarily out of business.

Production started again this week and is increasing in stages, but share prices have tumbled and it's far from clear how long it will take to resume full output.

``We're doing the best we can,'' said Chow San-Yi, deputy director general of the Hsinchu Science-based Industrial Park, Taiwan's answer to Silicon Valley.

Hsinchu resembles a slice of the U.S. West Coast transported to northern Taiwan. Many computer executives live there in modern condos and duplexes with lawns, a lifestyle many got used to while working in California's high-tech industry.

Hsinchu, which means ``New Bamboo,'' is one of Taiwan's great economic success stories, so getting the chipmakers back online has been a priority after the quake.

While many industries now face daily rationing of electricity, as do ordinary citizens, state-run Taiwan Power Co. is feeding a constant supply to Hsinchu, about 35 miles southwest of the capital, Taipei.

The 7.6 magnitude earthquake on Sept. 21 devastated central Taiwan, killing some 2,100 people and throwing the island into chaos. Investors immediately started worrying about the semiconductors. Taiwan's high-tech companies build 10 percent of the world's chips and 80 percent of the ``motherboards'' used to run personal computers.

The quake's epicenter was well to the south, and the high-tech plants were relatively unshaken, compared with numerous buildings reduced to rubble. But it takes only a modest jolt to upset the delicate balance in Hsinchu's production and testing equipment, and the tremors felt there were more than powerful enough.

``If you barely touch it, it will be out of alignment,'' said Peter Chang, chief executive of foundry operations at the UMC Group, Taiwan's No. 2 chipmaker after the giant Taiwan Semiconductor Manufacturing Co. But the damage was less than originally estimated. Chang said the company was operating at 50 percent of capacity early this week, although 90 percent of its equipment was back online.
``The other 10 percent is very crucial,'' he said in an interview Tuesday.

Equipment still needing to be fixed includes quartz tubes used to process silicon wafers at temperatures of up to 2,000 degrees before they can be made into chips.
Hundreds of chips were damaged or ruined in the quake. Chang said the company will lose about 25 percent of its revenues in September and 10 percent in October. ``After that, everything should be normal,'' he said. All told, analysts say the quake is expected to cost chipmakers about $200 million to $300 million in lost revenues. Investors pushed shares down as far as possible under Taiwanese securities rules when the Taipei stock market reopened this week, after it, too, was shut by the quake. Some analysts say the selloff was the type of overreaction that often sweeps markets. ``Most of these companies are feeling better than they originally expected to,'' said Liu Chitung, a semiconductor analyst at investment bank Warburg Dillon Read in Taipei. ``But we will still need to wait a while to know the overall damage.'' The quake's economic aftershocks have spread throughout the global high-tech supply chain, which was already producing at near capacity heading into the busy Christmas season. Spot prices of some components shot higher in response. For example, standard DRAM chips, the circuits that allow computers to store data for quick retrieval, jumped from about $15 to $20. ``Some of that's speculation, but in some respects it's an indication of where the supply-demand balance is,'' said Daniel Heyler, a high-tech analyst with Merrill Lynch investment bank in Taipei. Consumers who buy personal computers may end up paying more in the short term, though how much more is hard to say. Copyright 1999 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

-- Shelia (Shelia@active-stream.com), September 28, 1999


Thanks Sheila,

Do you have a link or the URL?

-- @ (@@@.@), September 28, 1999.

I got it off the AP Breaking news which is continually changing...and items disappear. This one was posted at 4:25 and is gone now.

And I messed up the format by accidentally hitting the submit key before I had finished ...


-- Shelia (Shelia@active-stream.com), September 29, 1999.

Thanks Shelia. The semiconductor industry is of course a very important one in these high-tech days we live in. I know some people who will be interested to read about the complications involved in getting up and running again after a disaster like this. Very informative. I will just refer them to this post or make a text copy and mail it to them. Thanks again, take care.

-- @ (@@@.@), September 29, 1999.

Supply and demand.

I read an article, InfoWorld I think, maybe PC Week, about LCD displays, both notebook and larger monitors. The demand is way up, and 6, that's a half dozen, new plants were under consturction in Taiwan to beef up the supply.

The price was going way up the last time I checked, about a month ago. I wonder what's going on now.

Tick... Tock... <:00=

-- Sysman (y2kboard@yahoo.com), September 29, 1999.

It really is a mess, and is definitely having an impact. 128 MEG Dimms went from about $75 4 weeks ago to $310 now. Rumor has it they may be closer to $370 by the end of the week. I also heard that video memory chips have been even more seriously effected, and that video card prices will begin to rise sharply. Some of the manufacturers who weren't hit by the quake are still unable to ship because there was extensive damage to shipping ports.

-- RUOK (RUOK@yesiam.com), September 29, 1999.

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