Welcome to the industry's biggest guessing game: How will the big Taiwan earthquake shake up the chip market?
No problem, if one can believe the flood of press releases pouring in from both sides of the Pacific. Yet a few updated company forecasts are now hinting there may be a glitch in their fourth quarter results.
No doubt the quake will become a handy excuse for all kinds of poor operating results, so look for more early-warning "missed target" announcements in the months ahead that blame the October quake.
A growing number of people in the industry are taking the early euphoria flowing out of Taiwan with some skepticism. As a result, managers from OEMs, chip suppliers, distributors, and resellers are all scrambling to gain a better assessment of any market aftershocks from the quake.
To begin with, most of the big Taiwan silicon foundries lost several weeks worth of wafer production as they restarted and requalified their production lines. This will put a dent in the current supply of many devices--especially the graphics, controllers, and peripheral chips widely used in IT products.
But if that's the only problem from this quake, the global market will likely pick up the slack in short order.
The quake came at a bad time. Taiwan manufacturers were running close to 100% capacity and were in the midst of major capacity expansions. There's no doubt that getting their plants back into production will delay these expansion plans. That too could put a crimp in future supplies.
Then there are those wafers-in-process that were lost when the quake knocked out production lines. No firm estimate on the total is available, but some wafers may be salvaged in rework. But many of the wafers must be started again from scratch, a process that will mean several months of delay in getting these chips to customers.
Timing of the quake also was bad because PC OEMs were going fullspeed to fill the pipeline for the holiday selling season. Many executives worry that if PC makers can't get all the essential parts they need on a timely basis, it could cause their product shipments to lag. If there is any shortfall of PC deliveries during the peak holiday period, the next question is: Will this result in lost sales that won't be recovered, or will this demand carry over to the first half of 2000? No one knows for sure.
Finally, the Taiwan chip makers also could be slowed by the large amount of breakage during the quake of essential quartz boats and tubes for their furnaces. The problem here is that chip makers will have a difficult time replacing this quartzware, since the market was already in critical short supply before the quake.
But the Taiwan chip industry has proven before that it can move faster than most people believe, so its recovery could be fast. So the quake's impact on global markets, if any, could be brief.