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. "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 expect 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.
"TSMC and UMC have got a big problem," an executive at a Taipei-based computer products maker told the Taipei Times, "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."
Leadtek's factories in Taipei County would probably restart on Monday, Li said. "Fortunately, because the fourth quarter is high season, " he said, "we have 30 days to 45 days inventory of chips." 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. Graphics chip suppliers have told Leadtek that delivery will be delayed, and prices will be increased.
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 also 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 of their chips from companies in Hsinchu, and have no second source, he said. There is also an ongoing shortage of some Intel chipsets, and the company's newest chipsets have proved unpopular with system designers.
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