Wednesday, December 22, 2004
Sanyo Electric Co. Ltd. estimated the cost of earthquake damage at its Niigata semiconductor fab last October at about ¥87 billion, or $837 million, further eroding its financial performance in the current quarter.
The Niigata fab is Sanyo's largest front-end semiconductor subsidiary with sales totaling ¥48 billion (about $462 million) last year. The fab is located near the center of the site of the Niigata Chuetsu earthquake on Oct. 23. The outer shell of the building was not heavily damaged, but frequent aftershocks made it difficult to determine the amount of damage inside the clean room and to pipes, slowing recovery efforts and the resumption of operation. Japan's Meteorological Agency said last week (Dec. 16) that aftershocks in the area have finally diminished to the point where serious damage is unlikely to reoccur. Sanyo reported that fab damage totaled ¥18.4 billion (about $177 million) for production facilities, ¥4.6 billion ($44 million) for lost inventory and ¥27 billion ($260 million) for restoration costs. Another ¥300 million ($3 million) has been earmarked to pay for recovery operations.
The total impact of work stoppages and resulting sales losses was estimated to be ¥37 billion ($356 million). Along with ¥50 billion ($481 million) in damage, Sanyo estimated that the loss in pretax profit totaled ¥87 billion ($837 million) on a consolidate basis.
After several large aftershocks close to the fab, Sanyo began investigating damage inside of the fab on Nov. 8. Gas leaks were found in the clean room. Electricity, water, air conditioning and gas utilities were restored by Nov. 30.
Test production started on Dec. 6 using one the fab's five lines. Regular operations are scheduled to resume on Wednesday (Dec. 22).
Sanyo began producing devices such as audio-video MOS chips at alternative sites in early November. It also increased foundry production elsewhere to make up some of the lost production at its main fab, according to a Sanyo spokesman, though he declined to disclose details of the shortfall.
Sanyo has not disclosed when it expects the Niigata fab to resume full operation.
Other electronics companies in the area resumed operations shortly after October quake.
By: DocMemory
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