Share prices of the world's two largest memory chip developers, Hyundai Electronics Industries Co and Samsung Electronics Co, rallied after yesterday's earthquake in Taiwan disrupted production. Analysts predict that Singapore's Chartered Semiconductor Manufacturing Ltd, the world's third-largest chip contract manufacturer, may win more orders as a result of the quake, boosting its profile ahead of its initial share offering.
Chartered's immediate manufacturing rivals, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and United Microelectronics Corp (UMC, 聯電), the world's two biggest chip contract manufacturers, are both based in Taiwan.
Estimates of the damage to the semiconductor industry in the Hsinchu Science-based Industrial Park from power outages alone are in the NT$5 billion range and expected to climb.
Korean chipmakers supply 34 percent of the world's consumption for 64-megabit dynamic random access chips (DRAM), while Taiwanese firms supplied 15 percent in the third quarter this year, according to Samsung's estimates.
``It's not a matter of how large a share Taiwan chipmakers contribributed to world supply,''Jon Chong Hwa, a semiconductor analyst at Salomon Smith Barney KEB Securities Co in Seoul, said. ``The market will respond to the news for psychological reasons. Still, I guess its effect won't last long.''
Before the unexpected quake in Taiwan, global DRAM prices had began to climb in July after Japanese companies such as Fujitsu Ltd and Mitsubishi Electric Co, stung by losses, either withdrew from DRAM production or scaled down their output.
Chen Li-jung, a spokeswoman for TSMC, said the company's wafer fabrication plants weren't damaged, though they had been closed down. The 20-hour power outage at TSMC could cut monthly sales by 5 percent, according to Tim Greaton, senior portfolio manager at CMG First State Investment (Asia) Ltd in Hong Kong.
ASE Test, the world's biggest semiconductor testing company, said it doesn't expect losses from the quake. The company didn't halt production during the quake, and nor did it suffer any damage, it said in a statement.
``Semiconductor and chemical stock prices jumped yesterday because disrupted production at some of their Taiwanese rivals is expected to boost demand for Korean products,'' said Lee Chai Won, a fund manager at Dongwon BNP Investment Trust Management Co, who manages US$499 million in equity funds.
Share prices of Hyundai Electronics Industries Co, the largest memory chipmaker after it took over LG Semicon Co early this year, rose 13 percent to 39,800 won. Samsung, the second largest, rose 8.6 percent to 240,000 won. Chemical companies that compete with Taiwanese rivals such as Hanwha Chemical Corp also gained.
After the earthquake, ``global prices for chips will pick up their rising pace toward the end of this year,'' said James Chung, a Samsung spokesman. Samsung said it is already at full production. Samsung and other Korean chipmakers don't have any production bases in Taiwan.
Other memory chipmakers include Mosel Vitelic Inc and Pro MOS Technologies Inc, which sell to Siemens AG and other buyers.
UMC, the world's No. 2 custom designed chipmaker, says its losses would be larger than those suffered in Taiwan's July 29 islandwide power outage, which caused NT$400 million of losses.
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