Just as the world's air cargo traffic was beginning to flow again, a deadly typhoon has disrupted production in Taiwan, one of the most important suppliers of computers, semiconductors and other electronics to the US technology industry.
Typhoon Nari swamped Taipei, with record amounts of rain early this week, killing 79 people, flooding streets, and shutting factories across the nation. Most managed to reopen Wednesday, but local companies said the typhoon would aggravate disruptions in production and shipping that began after the terrorist attacks in the US last week.
"This is really starting to cause trouble," said Horace Tsiang, the chief executive of First International Computer Inc (
Tsiang said his company faced a chain of disruptions that began when flights from the US to Asia were suspended last week after the attacks. That cut off the flow of integrated circuits from the US, which Taiwanese companies use to make liquid crystal displays.
Because the company uses LCDs, it has had to suspend production until its supply is restored. That should have happened by now, except that the typhoon flooded the plant of its supplier.
"It started with 9/11," Tsiang said, referring to the date of the terrorist attacks. "But now, quite a few suppliers are not able to give us parts. Since nine this morning, I've been chasing parts."
Before the typhoon, Taiwan and other Asian manufacturing nations were clearing a backlog of shipments that piled up last week when the terrorist attacks prompted the US to ground all commercial flights. The problem was compounded by a ban on carrying cargo on passenger jets, which was lifted after three days.
Analysts said that disruption had less impact than first feared because of the slack demand for computer equipment in the US. "Tech buying has been so weak that most of the plants haven't been affected," said Davina Yeo, an analyst at the International Data Corp in Singapore.
The impact of the halt in flights to and from the US was also mitigated because American companies had begun subcontracting more and more of the production of finished electronics products to Asia.
ST Assembly Test Services Inc, which tests and packages semiconductors for companies like Alcatel, Infineon Technology and Taiwan Semiconductor Manufacturing Co (台積電), said it was shipping fewer chips directly to its American customers and more to their contractors on this side of the Pacific, according to Elaine Ang, the head of investor relations at ST Assembly, based in Singapore.
Still, continued disruption in Taiwan could mean trouble for American companies, which are building up stocks of video games and other electronic products in preparation for the holiday shopping season. Analysts said a delay in the delivery of new cellphones could squeeze retailers, who have experienced a jump in consumer demand in recent weeks.
"These are areas where there might be more urgency, and less of a buffer, in the system," said Matt Cleary, senior vice president and head of Asian technology research at Lehman Brothers in Taipei.
Beyond the disruption in shipments, manufacturers here worry that the terrorist attacks and the fear of a war will batter already shaky consumer confidence, which could hurt companies across Asia.Makoto Mihara, a spokesman for Matsushita Electric Industrial of Japan, said it had escaped trouble from the grounding of flights because it ships most of its products by sea. But Mihara said Matsushita, whose brands include Panasonic, was worried about holiday sales.
Airlines and freight agents are likewise feeling both relief and anxiety. Shares of several Asian airlines rose Wednesday as they reported better-than-expected bookings on flights to North America.
After a three-day ban imposed by the Federal Aviation Administration, Singapore Airlines, Cathay Pacific Airways and other carriers are once again being permitted to carry cargo in the holds of passenger planes flying to the US. Normally, up to half of all air cargo across the Pacific flies on planes shared with passengers rather than on all-cargo jet freighters.
But freight agents noted that the airlines had imposed strict security procedures that slow down shipments and run up costs.
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