Impact of Taiwan's quake begins to be felt in markets, designs
By George Leopold and Rick Merritt
EE Times
(09/24/99, 09:49:00 AM EDT)
WASHINGTON ( ChipWire) -- The financial and technical impact of the earthquake in Taiwan rippled across the globe
Thursday and escalated to more than $300 million in damages and lost revenue, as engineers scrambled to restore
power to one of the crucial electronics-manufacturing hubs in the world.
Partial power was reported restored to two of the biggest foundries in the world, Taiwan Semiconductor Manufacturing
Co. and UMC Group, but their factories remained closed. Some engineers, eyeing memory-price spikes, began
rethinking systems designs. And crisis teams from at least one semiconductor equipment company flew in from the
other side of the world to begin the delicate task of recalibrating hundreds of multimillion-dollar lithography machines.
Technology stock prices sank on the uncertainty of the quake's impact.
The first big tangible fallout from the tragedy hit Advanced Micro Devices Inc.: Two out of three of AMD's Taiwanese board
makers, who were rushing to build boards for AMD's ?Pentium III-killer? Athlon processor, are out of action.
Both GVC and Microstar have halted production of their Athlon boards in the aftermath of the quake. First International
Computer is running at about 60% capacity at a Taipei plant, the only one currently making the Athlon boards, said Tom
Chang, director of marketing for FIC in Fremont, Calif.
"As of right now, it looks like it is only FIC. The others say they will be two or three weeks away from shipping again,"
said Doug Massa, a channel marketing manager for AMD in Sunnyvale, Calif. "This is definitely a speed bump for us. It
was an unforeseen problem."
Before the quake, AMD sent a number of engineers to Taiwan to help other motherboard makers including Acer and
Asustek ramp up boards that use the fast CPU in hopes a number of other boards will ship by the end of the year.
However, the complex design has slowed the pace of uptake, said a senior engineer at NEC Corp.'s PC group who asked
not to be named.
"Athlon is definitely a challenge that has a lot of people burning the midnight oil right now, in part because it uses a fast
200-MHz frontside bus," the engineer said. "Also, AMD has not yet been able to get out boards that support two-way
processors. That would really be competitive against the Intel Xeon line."
In Washington, officials in contact with U.S. personnel surveying the damage in Taiwan stressed the long-term
consequences of the earthquake on Taiwan's electronics industry. "Power rationing is going to continue for the next three
weeks," said a State Department official who tracks Taiwan. "That's obviously going to have an effect on the
semiconductor plants over there."
That conflicted with reports from Taiwan Power, the island's main utility, that indicated full power could be restored by
Saturday. TSMC, the world's largest pure-play foundry, said it had regained 65% of its power, and UMC said it had
regained 70% of power (see Sept. 23 ).
According to reports out of Taipei by the American Institute for Taiwan, the private corporation that represents the United
States there, the industry's loss could reach $313 million due to power outages and lost production. Private estimates
were even higher.
Taiwan produces between 13-15 percent of the world's semiconductors. It also accounts for 80 percent of PC
motherboard production and roughly two-thirds of global wafer production and processing. Estimates of its share of the
DRAM market range between 5 and 6 percent. According to Taiwan's Institute of Information Industry, total hardware
production topped $33 billion in 1998.
Given its sheer size, the electronics industry's losses are also expected to have a major impact on Taiwan's economic
growth. According to Taiwan's Ministry of Economic Affairs, economic growth is expected to decline from 6 percent to
5.6 percent as a direct result of the earthquake. Taiwan is the U.S.' seventh-largest trading partner.
"A lot of people are really going to be hurt by this," said Rupert Hammond-Chambers, vice president of the U.S.-Taiwan
BusinessCouncil in Arlington, Va. "It will take the whole of the fourth quarter for us to really start seeing the [quake's]
impact."
The industry group estimated Taiwan's IC production totaled $1.88 billion in August. Taiwanese fabs are losing an
estimated $63 million each day they are shut down, Hammond-Chambers said. U.S. and Taiwanese officials estimated
that plant closures at Hsinchu would be closer to $15.6 million per day.
Still, industry observers doubted semiconductor firms would begin moving out of Taiwan to new locations in mainland
China or Thailand. Chip makers will continue to "base production around the chip market" in Taiwan,
Hammond-Chambers predicted.
The initial impact of the Taiwan earthquake in Asian markets was to drive up memory prices. In Beijing's Zhongguancun
electronics district, for instance, retail prices for memory modules jumped 20% this week after the earthquake struck.
Meanwhile, prices for 64-megabit SDRAMs from South Korea jumped $24 on the Beijing retail market to $139. Memory
module prices in China had already been climbing after a typhoon struck Hong Kong the previous week.
Japanese products sold in China were slightly cheaper than Korean chips, according to local vendors. The sudden sharp
jump in memory prices has prompted the emerging Chinese semiconductor industry to reassess its production plans.
Shanghai Huahong NEC Electronics Co. Ltd., the Chinese government's joint venture with Japan's NEC Corp., is set to
start up its volume production on its new line beginning this week. The fab had been producing 5,000 wafers a month
during trial processing. The fab will eventually produce 20,000 wafers a month.
Spikes in the price of SDRAMs have design engineers rethinking the mix of SDRAM versus Direct Rambus designs they
may put into the mix this fall, potentially nudging the ramp of Rambus up a notch.
"We've been told to go back and look at Rambus designs," said the NEC engineer. "Instead of a 95/5 percent mix of
SDRAM and Rambus we may move to a 90/10 percent mix. But that would require a whole new mix of chip sets and
other components and a whole new test program. It's not a simple change."
The engineer does not expect to get a full report on the overall Taiwan sourcing situation until Monday at which point a
switch in the memory mix would be determined. He said the quake has enormous potential for disrupting PC design
plans since NEC, like many companies, source motherboards, displays, keyboards, power supplies and cable
harnasses from Taiwan.
Expecting power to return soon, foundry officials called in strike teams from their semiconductor equipment vendors to
begin the task of recalibrating the hundreds of finely-tuned machines rattled silent by the earthquake and power outage.
ASML Lithography of Veldhoven, The Netherlands, flew a six-member team to bolster its two-dozen-strong engineering
group in Taiwan and begin to service 300 lithography steppers populated throughout Hsinchu Science Park. The
recalibration, while routinely done in fabs on a weekly or bimonthly basis, still will take days, given the situation, an
ASML spokesman said.
"It's just not just press reboot on your computer," said Mark Bigelow, a spokesman for ASML's U.S. operations in
Tempe, Ariz.
Engineers will need to power up the steppers, check software settings and then run a test wafer on each machine,
shooting through an overlay reticle to render an array of alignment marks over the image field. Once that's done, the
engineers will run the test wafer under a second stepper and then through a metrology machine to discover how far off the
alignments are, Bigelow said.
Bigelow said it's not unreasonable to be able to recalibrate an average fab in a day, "but it's going to take longer because
of power down situation and physical shaking."
Bigelow said it's unlikely that any of the million-dollar quartz lenses were damaged in the temblor. They're often put
through rougher shaking, even in special packing, during delivery from Veldhoven to customer sites, he added.
Meanwhile, the big three Taiwan semiconductor houses, TSMC, UMC and Winbond announced charitable contributions
to quake relief totaling more than $16 million. -- Additional reporting from Brian Fuller and Sunray Liu |
