Tuesday April 1, 5:32 PM
Asia Tech Sector Avoids Major Disruption From SARS
By Dan Nystedt
OF DOW JONES NEWSWIRES
TAIPEI (Dow Jones)--Asia's technology sector is managing to escape major disruption from the spread of severe acute respiratory syndrome, though it's being forced to slash business travel and take other precautions, industry spokesmen and analysts said Tuesday.
Share prices of some tech companies in the region have tumbled by around 10% or more during the past week, partly because investors fear production could be reduced if large numbers of factory workers have to be quarantined.
That could hurt the global technology sector as well as many Asian economies, since much of the area where the contagion is most feared - south China, Hong Kong, Singapore and Taiwan - is a major artery of the global tech sector supply chain. Over half the world's desktop and notebook computers are produced here, and nearly all of some vital components such as computer motherboards and graphics chips.
So far, however, the supply chain is avoiding significant damage. Production and shipments are continuing largely as normal, and the region's markets in memory chips and other electronic components aren't panicking.
A senior executive at Taiwan's World Peace Industrial Co. (Q.WPE), one of Asia's largest semiconductor component distributors, said its channel lines and orders were normal - a sign that companies weren't stockpiling components.
"For now, this is not an issue," said I.J. Hsu, a senior vice-president at World Peace, which works with vendors and customers including Intel Corp. (INTC), Toshiba Corp. (J.TOS), Flextronics International Ltd. (FLEX) and Quanta Computer Inc. (Q.QTC).
Over the past week, there have been scattered disruptions to small parts of the operations of tech companies.
In Singapore, the government ordered 305 workers at Motorola Inc. (MOT) to be quarantined at home after one of them was infected with SARS. A Motorola spokeswoman said the factory affected by the quarantine halted production for the Thursday night shift last week, but by Friday was back to normal.
U.S. chip giant Intel Corp. told some employees at one of its Hong Kong offices to work from home until further notice, after an employee showed symptoms of SARS. One of three floors at Intel's Asian sales and marketing office in Hong Kong was affected; staff on the other two floors are still working in the building.
In Taiwan, analysts said local investors were selling shares in tech companies which had a large portion of their operations in China, where the disease is believed to have originated.
"Nobody knows to what extent this disease is actually impacting the market, but there is a suspicion that the number of cases has not been reported accurately, and that has made a lot of people paranoid," said Rex Lin, vice- president of equities at ING Financial Markets in Taipei.
However, analysts said that so far, incidents at technology companies in the region weren't enough to become a serious threat to the sector.
"Companies are very worried about this issue so they're asking staff to wear masks and take other precautions, and that's a good sign," said Henry King, a long time tech sector analyst at Goldman Sachs in Taipei.
Singapore's Flextronics International Ltd., which produces tech goods from game consoles to mobile phones on a contract basis for multinationals such as Microsoft Corp. (MSFT) and Siemens AG (SI), said none of its 50,000 staff in Asia had been affected by the disease.
About a third of its Asian employees are in southern China, where the first SARS cases were diagnosed.
"We've curtailed all travel activity, especially to heavily infected areas like Hong Kong and China - southern China in particular," said Valerie Kurniawan, a Flextronics spokeswoman.
She said all production lines were operating as usual.
"If any employee gets affected, we will quarantine the whole department or vicinity where the employee is working, or the division, depending on the magnitude of the outbreak," she said.
Officials at Taiwan's key technology hub, the Hsinchu Science-based Industrial Park, said no SARS cases have been reported in the park, but it has called a meeting with companies to discuss precautionary measures.
Many Taiwanese tech firms supply U.S. companies such as Hewlett-Packard Co. (HPQ) and Dell Computer Corp. (DELL) from manufacturing centers in China. Nearly 10,000 business people from Taiwan travel through Hong Kong every day.
The Hsinchu park is also home to the world's two largest microchip foundries, Taiwan Semiconductor Manufacturing Co. (TSM) and United Microelectronics Corp. (UMC).
Both chipmakers have put emergency measures in place, though they say SARS hasn't had any impact on their operations.
TSMC asked employees to halt all personal and business trips to affected areas, including Canada. The firm said it was requiring any staff returning from affected areas to report to TSMC's health center for checkups before going back to work.
The company currently has almost no links to China, but said its plans for a chip plant in Shanghai - which has yet to start major construction work - were still on track.
In Tokyo, the headquarters of Japanese electronics giants with big investments in the region said they hadn't suffered significant disruptions.
Sony Corp. (SNE or 6758) said it hadn't taken any measures against the disease and was not considering any at present.
Telecommunications company NTT DoCoMo Inc. (DCM or 9437) said it had asked employees to minimize their overseas business trips.
-By Dan Nystedt, Dow Jones Newswires; (8862) 2502-2557; dan.nystedt@dowjones.com
(Sai Man in Singapore and J.R. Wu in Taipei contributed to this report)
-Edited by Andrew Torchia and Andrea Thomas |
