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Earthquake costs Taiwan semicon industry $300m

Nightmare for Hsinchu chip makers, writes Simon Burns from Taipei

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After a massive earthquake hit Taiwan, major electronics manufacturers in the Hsinchu science park were struggling to cope with a continuing power outage Tuesday evening, but said production facilities did not appear to have suffered serious damage. "It's a kind of nightmare for us," said Winbond Electronics assistant vice president, Hander Chang, "just like most companies here we are waiting for power." "We don’t know when power will be restored," Taiwan Semiconductor Manufacturing Co (TSMC) spokesman, Tzeng Jin Haw said. Without power, Mr. Tzeng said, it was difficult to assess damage or losses. Highly speculative local media reports estimated losses in the Hsinchu Science-Based Industrial Park at between US$150 and US$300 million. Taiwan’s semiconductor industry, Hsinchu’s largest income generator, is predicted to make roughly US$10 billion in revenues this year -- an average of US$27.4 million per day. Although TSMC has been in contact with Taipower officials in Hsinchu, Cheng explained, the state power monopoly had been unable say when it would resume service to the science park. An executive at one semiconductor manufacturer, speaking at around 8 pm, was harshly critical of Taipower's performance. "I just spoke to them, they were unable to give me a clear schedule [for power restoration]. Although this was an unpredictable event, they need to have a contingency plan; there are many earthquakes in Taiwan. They don’t have good staff or good planning...to help their customers." Winbond's Chang said he believed some companies in thepark were running on emergency battery power only, and could not do so indefinitely. Winbond is using generators to keep chip production equipment in a stable condition. Without backup power, unfinished chips would be ruined, and equipment could take considerable time to restart. In view of the problems in Hsinchu, a shortage of chips and other components was the biggest worry for Jeff Lin, marketing manager at Taipei-based motherboard maker, Epox, "I guess for one or two weeks, there’ll be no problem, but maybe in a month, there will be a shortage of components." The fledgling science park in Tainan was less seriously affected. "We’ve been very lucky," said Jeff Shi, Vice President for sales, marketing and procurement at LCD maker Chi Mei Optoelectronics. "Nothing seems to be seriously damaged," he continued, "other than a few pumps..., and we do not have a power outage either." Shi did not expect problems with component supply, because most of Chi Mei’s suppliers are based in Japan. ® See also Korean stocks soar on Taiwan disaster Massive quake hits Taiwan DRAM price hikes to propel Samsung profit past $2bn

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