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Business

Earthquake has limited impact on operations

TAIPEI -- Taiwan Semiconductor Manufacturing Co., the world's biggest contract chipmaker, on Saturday said some wafers might have been damaged by a powerful earthquake that shook southern Taiwan in the morning but that it expects current quarter shipments to be affected by less than 1%, if at all.

     Wafers are the thin slices of silicon on which integrated circuits, or chips, are manufactured.

     TSMC, which controls 54% of the global chip market, said in a statement that it was still assessing damage at its factories in Tainan Science Park, in southern Taiwan. The statement said some clients might be impacted.

     "If the damage is around 1% of its wafer shipments, that would amount to roughly a loss of 2.5 billion New Taiwan dollars to NT$3 billion ($75 million to $90 million)," said Carlos Peng, an analyst at Fubon Securities in Taipei. "Chips produced in Tainan are more advanced and more expensive than TSMC's average" chips.

     TSMC reported a net profit of NT$78.99 billion for the first quarter in 2015.

     Tainan is a key production base for TSMC. It is where the company makes its most advanced 16-nanometer and 20nm chips, which go into Apple's iPhone 6 and 6s. These chips also make up high-end graphic and Internet processing units.

     TSMC estimates that more than 95% of its equipment in Tainan can be back to running at full speed in two to three days.

     The strong earthquake rattled several facilities inside the Tainan Science Park. Semiconductor and liquid crystal display manufacturing sites suffered the most. Chip and panel production equipment is both delicate and sensitive, spokesman Su Chen-kang said.

     "There is no significant damage to the buildings and production facilities," Su said. "But TSMC, chipmaker United Microelectronics and panel supplier Innolux all reported that some portion of their equipment requires checking before they can restart production. Water, electricity and gas supplies are all good."

     Liu Chi-tung, UMC's chief financial officer, said some unfinished wafers have been damaged but not enough to noticeably slow the company's operations. February, Liu said, is the middle of the chipmaker's low season.

     Innolux reported a small-scale fire at its Tainan facility but declined to comment on possible losses.

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