|
Chip shortage more likely
|
 |
September 22, 1999: 3:19 p.m. ET
Power outage at Taiwan foundries could extend into next week, lifting chip prices
|
NEW YORK (CNNfn) - The Taiwan foundries that produce two-thirds of the world's integrated computer chips remained dark for a second straight day Wednesday, prompting experts to worry a temporary shortage of microprocessors might prove more extensive than first thought.
The companies that operate and utilize the 28 foundries at a science park in Hsinchu, Taiwan, continued Wednesday to maintain that Tuesday morning's massive earthquake produced little to no structural damage to their facilities.
However, industry experts say the real assessment of damage to the foundries' highly sensitive equipment won't even be able to begin until the companies get power back -- something that may not happen for another five days or more.
"Where we are in terms of damage assessment is my initial assessment of these factories being shut down for three days to one week is now very optimistic," said Danny Lam, director of Fisher-Holstein, Inc., who spoke Tuesday to several people at the foundries.
"One week is now my optimistic figure and it goes out from there," he said.
That is sure to worry industry analysts, who expressed concern Tuesday that the earthquake could pinch an already tight microprocessor inventory and boost computer prices just prior to Christmas.
Power restoration is critical
Once power is restored, experts predict it will take a minimum of two days to examine foundries' machinery for damage, locate possible gas leaks and determine what portion of the chips already in production can be salvaged.
Of particular concern are the highly sensitive lithography tools which actually print the circuits onto the chips. A majority, if not all, of those machines likely will need to be recalibrated, Lam said.
The prolonged lack of power also likely will shut down the diffusion ovens that bake the chips, and impurities likely will be found in delicate systems, Lam said.
Most of the foundries currently are running on back up power systems, but experts say that can last only for so long.
Taiwan energy officials said Wednesday their first priority is restoring power to residential areas. Full power would not be restored for an additional two to three weeks.
Foundry officials are expecting about 85 percent power to be restored by Monday, said Jodi Shelton, executive director of the Fabless Semiconductor Association, an organization that represents chip makers unaffiliated with specific computer manufacturers.
But even then, that may not be enough. Foundries need a higher-capacity, uninterrupted flow of power to handle the demands of their machinery. With lingering aftershocks still threatening the area, some believe it could be up to three weeks before that kind of dependable energy is restored.
DRAM prices likely to rise
All of which could drive up prices on DRAM chips, the most common form of memory chip used in most personal computers, just prior to the holiday season.
Brian Matas, vice president of market research of IC Insights Inc., a market research company for the integrated circuit industry, said Taiwan is expected to produce 12 percent to 15 percent of the world's DRAM chips this year, including a larger share of the lower-end models.
"We think there could be a spike in DRAM prices for a week or two right now," Matas said. "I don't know if that will hurt those companies significantly.
But if the foundries can't get up to full capacity within three weeks, "that will really cut in [to worldwide production] and start to raise prices," Matas said.
Some analysts predict wafer prices, the cost of the silicon base upon which the chip's other components are assembled, will rise 10 percent temporarily as a result of the earthquake. Prices could spike even further if the foundries are down longer than expected.
|
|
|
|
|
 |
|
