Japan quake seen having limited impact on TSMC Q3 revenue

Taipei, July 30 (CNA) An earthquake that forced a temporary shutdown of Taiwan Semiconductor Manufacturing Co.'s (TSMC) plant in Japan's Kumamoto Prefecture is expected to have a limited impact on third-quarter revenues, an analyst said Thursday.

The earthquake, which struck Tuesday, registered a maximum seismic intensity of 7 on Japan's seismic intensity scale in the Uki and Hikawa areas of Kumamoto Prefecture.

According to TSMC, employees at the company-led joint venture Japan Advanced Semiconductor Manufacturing Inc. (JASM) are safe and the plant's structures remain intact, while its water supply, power and safety systems are operating normally.

The chipmaker said some time will be needed to adjust and recalibrate equipment following the quake, but it has deployed resources to support JASM and confirmed that raw material supplies remain unaffected. The company, however, it did not say when it expected the fab to be fully back to normal.

Huang Chien-chih (黃健治), an analyst at Digitimes, said semiconductor equipment is highly sensitive to vibrations, and earthquakes can cause wafer losses and push process parameters out of specification, requiring production lines to be inspected and recalibrated before resuming operations.

Huang said JASM's first wafer fab has a planned monthly capacity of 55,000 12-inch wafers, using 28-nanometer, 22nm, 16nm and 12nm processes for applications including Sony's image sensors, logic chips, automotive electronics and industrial products. However, amid weak demand for automotive and smartphone applications, the plant's actual monthly output is about 20,000 wafers.

He estimated that if JASM's production were to be halted for one week, that would result in about US$14 million in potential revenue losses, accounting for only around 0.03 percent of TSMC's projected third-quarter revenue of US$45.2 billion.

The analyst said equipment recovery after an earthquake is a gradual process that involves safety checks, equipment inspections, recalibration and process verification before production can resume.

While JASM's buildings are safe and production lines are gradually recovering, the timeline for a full recovery remains uncertain due to the need to complete further checks on key equipment and possible delays to customer deliveries amid continued aftershocks.

On late Tuesday TSMC issued a statement saying the Kumamoto plant suffered no major damage and that operations were gradually being restored.

(By Chang Chien-chung and Ko Lin) Endiem/ASG