Texas Instruments sees 6 month disruption at Japan plant

Its earthquake stricken Miho factory was an important base for DLP and chip manufacturing

Texas Instruments anticipates between four and six months of disruption to its chip manufacturing operations in Japan following the massive earthquake that struck on March 11.

The company's factory in Miho, about 65 kilometers northeast of central Tokyo, was closed by the quake and suffered damage to infrastructure and its production line.

It was responsible for about 10 percent of the company's output by revenue in 2010 and the disruption will have a financial impact on the company, TI said in a statement. It was an important base for TI's DLP projector chip technology.

Repairs to the infrastructure systems at the plant were completed at the weekend and water, gas, chemical and air delivery has been restored, the company said. The plant's clean room -- a managed environment with air almost completely free of dust and other particles -- has been checked and recertified.

But work remains on the equipment at the plant, a portion of which has not been checked.

Texas Instruments said it expects initial production to resume in mid-April with full production achieved about three months after that. The plant will be back to full shipment capability in September, which translates to a roughly six month break in full shipment ability.

Production of about 80 percent of the Miho factory's work has been temporarily shifted to factories in Texas and Freising, Germany.

The company reported a better situation at a second plant in Japan. The Aizu factory has already resumed production and should reach full production by the middle of April.

Texas Instruments cautioned that the ability of both plants to meet those production schedules and recover partly relies on the supply of raw materials, which remains "dynamic," the company said.

The earthquake and tsunami has disrupted business across a large part of east Japan including at companies further up the supply chain.

"Operations of some existing suppliers are just beginning to recover, and TI is working closely with them to define and avoid potential supply chain disruptions," the company said in a statement.

"We also are working in parallel to ensure an independent supply of raw materials.  While information is improving each day, TI believes the full scope of supply challenges is still unknown and will remain cautious until sources fully return to normal," it said.

Texas Instruments will disclose the likely financial impact of the earthquake on April 18, when it releases first-quarter earnings.

Martyn Williams covers Japan and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is martyn_williams@idg.com

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