Chinese quake should not threaten Intel chip supply

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PC Pro is reporting that Intel hopes that its Chinese manufacturing plant is back in production by next week, but following the earthquake disaster has to admit that the situation could best be described as being 'dynamic.'

The chip packaging plant in Chengdu, some 60 miles away from the earthquake epicenter, was forced to close for the safety of its workers - none of whom were injured during the quake. With a seismic survey being carried out currently, workers could be back in place by the end of this week at the earliest.

Something in the region of 60 percent of the world's laptops are supplied by Quanta Computer and Compal Electronics, and they have issued a statement saying that they are waiting to hear from Intel with regard to how the closure and the earthquake will impact upon supplies of chips. Truth be told, it should not be too great, even if the plant were to remain closed into next week as it seems contingency plans are in place with Advanced Semiconductor Engineering, Amkor and Siliconware to fill any gaps in supply.

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— useful original report. A few clarifications and the actual outcome help put that short-term risk into context.

Intel’s Chengdu site was an assembly-and-test (packaging) facility, not a wafer fab, so its output is on the backend of the manufacturing chain rather than the front-end silicon production. (infoworld.com)

Immediately after the May 12, 2008 Sichuan earthquake Intel took the Chengdu plant offline, disconnected local utilities for a full seismic assessment, and confirmed employees were safe while investigations proceeded. Local press also reported Intel reached out to large OSATs (Advanced Semiconductor Engineering, Amkor and Siliconware) to provide contingency packaging capacity if needed. (infoworld.com)

Because packaging can be moved among multiple assembly/test sites and outsourced-foundry partners, and because OEMs and Intel carry short-term inventory buffers, analysts at the time expected only a brief interruption rather than a broad supply shock. The Chengdu facility was brought back up within about a week, with output ramping as systems were checked and equipment powered up. (eetimes.com)

Practical takeaway: backend-site outages are disruptive, but less likely to cause immediate global shortages than front-end wafer-fab failures. For historical incidents like this one, the combination of alternative OSAT capacity, multiple Intel assembly/test locations, and logistics buffers is why supply impact remained limited. (chinadaily.com.cn)

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