Wednesday, March 30, 2011

How Japan's Earthquake Is Shaking Up Taiwan's High-Tech Sector Damage to Japanese man

Damage to Japanese manufacturers is bringing both shortages and opportunities to Taiwan

Photo: Kim Kyung Hoon/Reuters

30 March 2011—In our globalized economy, no one suffers alone. Two weeks after a 9.0-magnitude earthquake and a catastrophic tsunami devastated northeastern Japan and brought a nuclear power plant to the brink of meltdown, the regional impacts of the disaster are just starting to become clear. The World Bank has estimated that the cost of damages could reach US $235 billion and has warned that economies across East Asia may be affected.

Taiwan’s high-tech sector is scrambling to determine how its own manufacturing will be affected by the troubles across the sea. Industries that rely on Japanese suppliers for raw materials and components are wondering how long it will take to restore reliable power and transportation in eastern Japan, which is home to several key suppliers. But some Taiwanese companies may also be able to find opportunities in the crisis, filling the void left by the temporary shutdown of Japanese plants.

"Based on our estimation, the worst scenario is that Taiwan’s economic growth will lose 0.2 percentage points due to the earthquake hitting Japan. However, extra orders might somewhat offset the loss," Taiwan premier Wu Den-yih told Taipei-based foreign correspondents on 29 March. In February, the Taiwanese government had forecast growth of 4.92 percent in 2011.