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Apple shipments on track despite Taiwan blackout, suppliers say

President sorry for worst power outage since 1999, reiterates green policy

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A country-wide blackout in Taiwan led to minor operational disturbance for some Apple suppliers.   © Reuters

TAIPEI -- Three Apple suppliers said Wednesday the power outage in Taiwan the day before did affect some of their production facilities in the country, although they saw little impact on overall operation and shipments.

The three suppliers were major chip assemblers and testers: Advanced Semiconductor Engineering, PowerTech Technology and ChipMOS Technologies.

ASE, a world leader, has assembly and testing orders for iPhone's Wi-Fi, baseband and fingerprint chips. PowerTech assembles and tests memory chips for Toshiba, Micron and Western Digital-controlled SanDisk. ChipMOS produces for Micron.

Micron, SanDisk and Toshiba supply memory chips for various Apple products.

Shares of ASE and ChipMos closed down more than 1% on Wednesday, while PowerTech gained 1.3%. The benchmark Taiex closed down 0.2% at 10,290.39.

The market's relative calm appeared to reflect consensus among market watchers that there was no material impact on the production of new iPhones.

"[A colleague said] there is not much impact for the moment and I tend to agree," said Vincent Chen, president of Taipei-based Yuanta Investment Consulting.

ASE said in a statement on Wednesday: "The impact on output from the blackout is estimated to be between $500,000 and $800,000 and the company is still assessing the total loss from this incident." 

The company said in an additional filing to the exchange that all production lines were working as normal by Tuesday night and there was no major impact on the company's operations. It had said earlier that a facility in southern city of Kaohsiung lost power for about an hour in the evening.

Parts of Taiwan were hit by the power failure Tuesday afternoon. State-owned utility company CPC said Wednesday that its preliminary investigation found that contract operator Lumax International may have mistakenly replaced parts in a power station's control system, causing fuel supply to automatically shut down. 

Lumax shares shed as much as 6.9% intraday, but bounced back to close down 3.6% on Wednesday.

It appeared to deny culpability in an exchange filing after the market closed, saying it only supplies parts to CPC and that it was CPC personnel who replaced the component on Tuesday. 

About 6.68 million Taiwanese households were left without power at different times while government-run Taiwan Power was fixing the problem. The sheer number of homes affected made it the island's most serious blackout since a major earthquake in 1999.

PowerTech Technology, the world's leading memory chip assembler by revenue, also suffered power failure in its facilities in the northern city of Hsinchu on more than one occasion on Tuesday, Chief Financial Officer Evan Tseng said.

"The sudden power cut caused some damage to some products. But such disruption is limited and would not have significant impact on the overall shipment," Tseng said.

ChipMos, a smaller rival to PowerTech, said its facilities in Hsinchu and southern city of Tainan were both affected by the power failure.

"We have resumed all production, and the electricity failure did not have a major impact on our financials and operations," said Chief Financial Officer S.K. Chen on Wednesday.

Other major Apple suppliers with production facilities in Taiwan were mostly unscarred by the incident. Chipmaker Taiwan Semiconductor Manufacturing Co., metal frame and casing maker Catcher Technology, camera lens maker Largan Precision, and Micron said their operations were unaffected by the power outage.

Taiwan's Minister of Economic Affairs Lee Chih-kung apologized and tendered his resignation on Tuesday following the blackout. On Wednesday, President Tsai Ing-wen also apologized for the worst power outage in more than 17 years.

She also used the opportunity to reiterate that her existing energy policy, including efforts to move away from nuclear power and boost the supply and use of green energy, is the way forward.

"The incident has taught us that we cannot wait to march on the right path of green energy systems and enhanced security for our electric grid," she said.

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