Study: 63% of IC fabs in earthquake zones

April 19, 2011 // By Dylan McGrath
Nearly two-thirds of the total worldwide semiconductor manufacturing capacity is located in seismically active areas, including more than 90 percent of foundry capacity, according to a report by market research firm IC Insights Inc.

The report notes that since the early days of chip production in Silicon Valley, the semiconductor industry has always had the bulk of its manufacturing located in seismically active regions. "It appears that, over time, the IC producers and their customers have just come to accept this situation as a fact of life," said the report.

IC Insights issued its report in light of the fact that more than 15 chip fabs experienced production interruptions associated the earthquake in Japan on March 11. Most of those fabs have by now ramped or are ramping toward at least partial production, but several sustained heavy damage and will remain offline for at least a few weeks. One fab, a 150-mm Freescale fab that is located just 80 miles from the epicenter of the magnitude 9.0 earthquake.

The world's two largest chip foundry companies, Taiwan Semiconductor Manufacturing Co. Ltd., and United Microelectronics Corp., are both based in Taiwan and have the vast majority of their manufacturing capacity based there. Because of this, IC Insights noted that a disastrous earthquake or typhoon in Taiwan could have serious ramifications for the entire electronics supply chain.

Because IC foundries have so many different customers and are sole-source producers for such a wide variety of part types, the ramifications of damage to foundry fabs would be much greater than damage done to individual IDM fabs, IC Insights said.