Texas Instruments to suffer revenue hit after Japanese quake damages plant

Texas Instruments (TI) is warning of lost revenue for the first and second quarters of 2011 after its Miho factory was damaged by the earthquake in north-eastern Japan on Friday.

The firm, which was chosen by Research In Motion (RIM) to provide the chips for its forthcoming PlayBook tablet, said that its main manufacturing site has suffered substantial damage and will have to be repaired in several stages.

The 9.0 magnitude earthquake and the tsunamis that followed caused widespread destruction throughout much of north-eastern Japan, with the death toll expected to rise beyond 10,000.

TI said it expects to be back to full shipment capacities by September this year.

Several lines of production will be reinstated in May and the factory should be back to full production by July. However, progress may get delayed if the region's power infrastructure is not repaired and stable in time, the firm added.

In the meantime, manufacturing will be moved to other facilities, and TI said that it already had one lined up for wafer production that could take up 60 per cent of that business.

Recovery has already begun at the facility, but TI said that systems that provide the Miho factory with chemicals, gases, water and air had all been damaged and would take three weeks to fix.

TI was unable to provide any information on whether its manufacturing hardware was working, as it was waiting for the power from suppliers to be switched back on.

Current work-in-progress has been damaged too, and the firm said it could possibly only save some 40 per cent of existing kit.

The building itself remains structurally sound, however. It is unclear as yet just how much TI expects to post in losses as a result of the disaster, although the Miho facility accounts for 10 per cent of the firm's revenues.

The firm's second factory at Aizu-wakamatsu, about 150 miles north of Tokyo, was also damaged in the earthquake, although equipment there is already being re-started and full production is estimated by mid-April.

The company's third fab in Hiji, about 500 miles south of Tokyo, was undamaged and is currently running at normal capacity, according to TI.