Graphics cards, Intel chipsets hit badly in quake aftershock
Component shortages could peak in November
Manufacturers of a wide range of computer and electronics products will be hit by a shortage of key components following Tuesday's earthquake, say analysts and industry sources in Taipei. "Some companies simply can't produce right now, for example the fabs (chip makers) in Hsinchu," said Paul Meyer of Credit Lyonnais Securities Asia, "Other companies aren't willing to produce until they get a steady feed of power.... So you may get a notebook company that's ready to ship a notebook, but they're waiting for a tiny plastic component." Chip makers in Hsinchu's science park hope to be back in operation next week, but say uncertainties over power prevent them giving a firm date. The world's two largest contract chip makers, Taiwan Semiconductor Manufacturing Co (TSMC) and United Microelectronics Corp.(UMC) are near standstill, along with most of their competitors. Two small memory chip makers, Nanya Technology, and Powerchip Semiconductor, which have independent power suppliers, say they have restarted production. "TSMC and UMC have got a big problem," an executive at a Taipei-based computer products maker said, "the reason is not only the power supply issue, but also they have some mechanical issues over there. So the recovery will take a long time." More than three quarters of the world's graphics chips are made at UMC and TSMC. "There's definitely going to be a components shortage for the industry," said Marx Li, marketing manager at graphics card maker, Leadtek Research, "our suppliers have already told us that in the short term there will be supply problems." "Fortunately, because the fourth quarter is high season, " Li said, "we have 30 days to 45 days inventory of chips. So in the short term we're still okay, but I don't know about the middle of November." Leadtek's factories in Taipei County are currently idle, Li said, but would probably restart on Monday. The company's surface mount technology (SMT)lines (where chips and other components are mounted onto printed circuit boards), which may have been shaken out of alignment during the quake, need to be recalibrated. The SMT machinery also needs a stable power supply to run, Li said End user prices for graphics cards and other products will probably rise, said Mr. Li, but he was unable to estimate the size of the increase. "That depends on the new prices quoted by our supplier." Graphics chip suppliers have told Leadtek that delivery will be delayed, and prices will be increased, Li said. "They don't know enough about the damage at TSMC and UMC, so they cannot make a final decision yet." There are no problems with production lines at major motherboard and notebook computer maker Asustek, said a company representative, but supply of some components, in particular, chipsets is a potential problem. Motherboard and PC makers may find it harder to get chipsets, said Don Floyd, of Credit Lyonnais Securities Asia in Taipei. Independent chipset vendors like VIA Technologies, Silicon Integrated Systems, and Acer Labs source almost all their chips from companies in Hsinchu, and may have no second source, he said. There is also an continuing shortage of Intel chipsets, such as the 440BX, and Intel's new 810 chipset has proved unpopular with motherboard and system designers. The government's National Science Council has intervened with the state-owned power company on behalf of chip makers. Taipower will be providing 80 to 85 per cent of power requirements by Monday, and possibly as soon as Saturday, said representatives of TSMC and UMC. "It's very hard for us to precisely assess damage from the earthquake," a TSMC spokesman said on Thursday evening, "at least we need to wait for power to come back so we can allow the whole team to start to check the production line." "Some of the wafers in the line... you can see by the broken mould that they should be scrapped.", said TSMC's spokesman, "However, lots of wafers still look good, but we should take a lot of time, equipment and resources to check if they can be reworked or not." The TSMC representative said that it was quite likely Hsinchu's chip plants could return to normal within two or three days, but in the worst case, nine or 10 days would be needed. ®
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