China earthquake impact on Intel plant appears to be superficial

If production loss results in lower chipset supply from Intel, it may help rivals Nvidia and AMD, an analyst suggests.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 5/14/2008

Monday’s detrimental earthquake in China's Sichuan region has impacted several tech companies with locations there, including MPU leader Intel Corp.

Intel spokesman Chuck Mulloy confirmed with Electronic News that the company halted production at its test and assembly plant in Chengdu after the quake hit. The company immediately evacuated all 1,600 site employees and cut power and water to the location.

The Intel plant is located approximately 55 miles southeast of the 7.9 magnitude tremor’s epicenter; the quake registered at an approximate 5.8 magnitude at the Chengdu facility.

“We’ve been back in the building now, power is restored, IT center is working, and a complete assessment is underway,” Mulloy said. “Right now, we are on track for beginning to move product [finished goods] out of the warehouse in Chengdu to service customers from that site probably tomorrow local time. We will begin the process of restarting [production] on Friday.”

Mulloy noted that none of the site’s employees was injured. Intel will begin bringing a limited number of the plant’s workforce back for the warehouse effort on Thursday and will begin to bring back the complete workforce on Friday.

“The damage that we have seen in our facility at this stage appears to be just superficial, but we won’t fully know that until we do a complete seismic analysis, which is underway. So far, we’ve found no major problems,” Mulloy said.

Intel has additional test and assembly plants in Malaysia, the Philippines, and Costa Rica.

“We believe that Intel may be able to leverage other facilities to meet demand,” Tim Luke, a semiconductor analyst with Lehman Brothers, said in a research note. 

However, he added, “If production loss results in lower chipset supply from Intel, it may help rivals Nvidia and AMD. The earthquake may also impact lead times, which are already slightly higher due to the battery fire led supply disruptions.”

The Intel Foundation has donated $300,000 in relief funds and is matching employee gifts up to $2,000 per employee.