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Taiwanese semiconductor firms face supply shortages in Japan

Consumer prices are expected to rise if earthquake damage cuts delivery of raw materials for wafers

Taiwan's major semiconductor manufacturers, a crucial link in the global tech supply chain, scrambled on Monday to gauge how their access to raw materials from Japanese suppliers will be affected by the powerful earthquake in Japan.

United Microelectronics, ProMOS Technologies and other firms said they were unsure how long existing inventories of wafer stock such as silicon would last and how disruptions in transportation or power following the magnitude 9.0 quake on Friday will upset supplies. Most can get by for one to two months, analysts believe.

"There will be an impact, but we don't know how big," said Powerchip Vice President Eric Tang. One of its four wafer material suppliers is in the disaster area of northeast Japan. "We are trying to understand it, but we can't get through to our suppliers yet."

Japan supplies an estimated 50 percent of raw 12-inch wafers and 30 percent of raw eight-inch wafers to Taiwan. Any halt in supplies would likely raise prices paid by semiconductor customers such as Apple and ultimately by buyers of PCs, smartphones and electronic gadgetry.

"Whether it affects the end user depends on whether you're talking about items of necessity," said Chen Hung-yi, a semiconductor analyst with Taishin Securities in Taipei. "Prices would definitely be adjusted, but for things that are less necessary, the public level's of acceptance would be lower."

Many firms said they opened business on Monday with meetings to get a grip on the effects of Japan's quake. United Microelectronics was doing an internal assessment of likely consequences and had not ruled out a price rise despite having "adequate supplies" at the moment, a spokesman said. ProMOS said it could get raw materials from Japan, for now, as its vendors are spread out around the country. Longer-term supplies are less certain.

But once power and transportation systems are back to normal, semiconductor makers will see little long-term impact, analysts said, as a nation as modern as Japan should be able to recover those systems within two months. Not all manufacturers are worried.

"Raw material-wise, we are in good shape," said Elizabeth Sun, acting spokeswoman for Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest semiconductor foundry. It can get by without a supply hitch for 30 days. "I don't think this will be a problem for TSMC. In 30 days transportation will come back up."

Taiwan's top smartphone designer High-Tech Computer (HTC), a buyer of semiconductors, said its supply chain and distribution channels are unaffected, but said it was keeping a wary eye on the future. It said it will take "any necessary steps" to keep operations going.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

More about: Apple, High-Tech Computer, HTC, SMC, Taiwan Semiconductor Manufacturing, Tohoku Electric Power Co., TSMC, United Microelectronics
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Tags: Components, consumer electronics, hardware systems, High Tech Computer, laptops, Motherboards, Phones, Powerchip Semiconductor, ProMOS Technologies, smartphones, Taiwan Semiconductor Manufacturing Co., United Microelectronics
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