SAN JOSE--Each day that Taiwan's 28 wafer fabs were out of production after last week's earthquake more than $40 million was lost, according to analyst Jim Handy, director of the Memories Worldwide program at Dataquest here.
Dataquest today said its analysts have received feedback from contacts in Taiwan, indicating that the main problems continue to be the restoration of electrical power to plants and replacement of broken quartzware in fabs. "In many fabs, a large portion of the furnace tubes and boats have been damaged, and the breakage has been so widespread that some worry that there is not enough quartzware capacity worldwide to replace these tools within a reasonable time," Handy said. "This could cause many fabs to sit idle, waiting for this critical equipment."
While Taiwan's fabs attempt to retart production, many of the island's largest silicon foundries are reporting rapid progress in ramping up their chip-processing lines. Taiwan Semiconductor Manufacturing Co., UMC Group and Winbond Electronics Corp. have reported the start of production and all three hope to be back at full capacity by the end of the week (see updates from Tuesday).
But analysts and semiconductor managers outside of Taiwan continue to watch the progress, wondering if the island's fabs will be running at high process yields once they are back online. Dataquest analysts said some input they have received indicates that although most of the fabs have been designed to withstand far stronger earthquakes than this one, equipment was not bolted down in many of the fabs, and there may have been significant equipment losses.
In addition to concerns about the logic foundries, attention is being placed on Taiwan's memory producers. Dataquest noted that although the majority of Taiwan's chip industry is not in DRAMs, the earthquake will effect the global memory market. The research firm said Taiwanese manufacturers account for about 6% of the world's DRAM output. News about production lines being shut down by the quake and power outages has caused spot DRAM prices to jump in the past week, Dataquest said.
"The DRAM spot market, which before the earthquake was already responding to other bad news, has seen spot prices double since the beginning of July," Handy noted. "The Taiwan earthquake has added fuel to this fire, and we expect to see prices rise above the already large increases that have occurred since the quake. We do not expect the current price rise to endure, however, because there is still a DRAM overcapacity, and the price rise is sure to motivate suppliers to increase their production."
Other segments within the semiconductor industry are still being assessed, said Dataquest. Programmable logic device (PLD) vendors, for example, are major customer segments for the foundries. Dataquest analysts said the leading PLD vendors have reported that they have sufficient inventories to ride out any anticipated disruptions at the foundries. Dataquest analysts said PLD revenues in the fourth quarter will probably be unaffected, but there could be some impact in the first quarter of 2000 as vendors work to refill the production pipeline.