Intel may switch production from quake-stricken Sichuan plant to Shanghai

Intel Corp. is reportedly mulling delegating part of its production at its test and assembly factory in the earthquake-stricken Sichuan Province of mainland China to its other factories and pure assemblers including Advanced Semiconductor Engineering (ASE) and Amkor.

Intel halted the factory all day long yesterday after a 7.9-magnitude earthquake badly shook the China's hinterland province one day earlier and has claimed at least 12,000 lives. The epicenter was in Wenchuan county.

Intel's Taiwan branch said the quake did not damage all production equipment at the factory, but the province's capital city of Chengdu, where the Intel factory is located, has lost electrical-power and water supplies. The branch's executives said without knowledge of when the power and water supplies will resume, the factory will keep halting indefinitely.

The factory is Intel's second in the Chinese mainland, specifically testing and packaging chipsets and microprocessors for uses in Asia. If Intel fails to find backup production capacity for the suspending factory, chipset and processor supplies in Asia would decrease in the third quarter.

Intel was assessing yesterday the feasibility of delegating the work at the Chengdu factory to its factories in Shangai, Malaysia and the Philippines as well as dedicated assemblers including ASE, Amkor and Siliconware Precision Industries.

Taiwanese industry watchers estimated Intel might contract ASE and Siliconware to test and assemble south-bridge chips for the chipsets and some logic chips waiting at the Chengdu factory. ASE is running a factory outfitted with 1,500 wire-bonding machines in the mainland. The factory will double output capacity by the end of this year.

Some assembly insiders pointed out even if the Chengdu factory was hit by the earthquake, the production resumption would not be complicated since the factory deal with dies not wafers.