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Earthquake In Taiwan Could Affect LTL Shipments

September 22, 1999

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The Taiwan earthquake could seriously disrupt the electronics industry, affecting trucking in the U.S., especially the less-than-truckload industry.

Taiwan supplies many of the memory circuits used in computers and other high-volume electronic devices. A memory shortage would significantly slow shipments of products, especially package and LTL shipments from mail order and internet manufacturers that keep very small inventories.
The quake has shut down all 28 semiconductor factories in Taiwan. Reports so far are that the area has no electricity. When power is restored, the delicate equipment which is carefully insulated from vibration and the piping that carries toxic gases have to be carefully inspected. Any damage may take weeks or even months to repair.
Typically, a semiconductor fabrication line takes one to six months to tune to full production when it is set up or significantly reworked.
Taiwan is also a contract manufacturer for a large share of the custom semiconductors used in a wide variety of products -- audio/video, consumer appliances, telecommunications, computer accessories and industrial controls. Often, a Taiwanese company is the only source for these circuits.
Currently the information technology industry has very low inventories -- about one month including work in process and finished products. A several week supply interruption would cause some shipping delays. Also likely is the need for fast delivery of supplies from alternate sources, which could be good news for the expedited freight industry.

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