Chinese Earthquake Disaster Won't Disrupt U.S. Tech Manufacturing Lines, Firms Say; Most Plants Far From Tragedy; Companies gauge impact, but expect to discover only minor damage to facilities

IBM, Intel and other U.S. tech companies with facilities in the Sichuan province, epicenter of China's 7.9- magnitude earthquake Monday, reported no injuries and little damage.

The quake killed more than 12,000 people and leveled more than 3.46 million homes, Chinese news agency Xinhua said Tuesday.

Despite the tragic loss of life, tech analysts and representatives for U.S. tech companies said they see little impact on U.S. high-tech firms.

"The main manufacturing stuff is still on the East Coast of China," said IDC analyst Michael Palma. "The effects of the quake were focused in Sichuan, in the west central area of China. As a result, I don't expect any major follow-on effects on U.S. high tech."

Palma noted that manufacturing is expanding from China's East Coast to the Western and Central provinces. If the earthquake had happened five or 10 years from now, he said, it might have had a bigger impact on tech operations.

Intel, the world's biggest chipmaker, has a chip test and assembly plant at Chengdu, just 55 miles south of the quake's epicenter. Spokesman Chuck Mulloy said the company shut down operations temporarily while it makes a full assessment of any possible damages.

He said inventory at the site, in the capital of Sichuan province, was undamaged. Intel doesn't expect any delays in shipments or impact to its bottom line.

Intel employs about 1,600 people at the site. Mulloy said the facility was built to U.S. earthquake standards. The factory was fully staffed, he said, and about 750 people were working in the complex when the temblor struck at 2:28 p.m. local time on Monday. That was 2:28 a.m. EDT.

"There were no injuries to employees at the plant or to Intel employees who were traveling at the time," Mulloy said. "When the earthquake struck we evacuated the building. As a precaution, initially we cut off all power and water to the building."

Inspection Under Way

Intel has brought in a seismic engineer to inspect the facility.

"We build to fairly strict construction standards," he said. "Case in point: We won't go back in until we have a qualified engineer inspect the site."

Mulloy said there was minor damage to ceiling tiles. He said Chinese authorities responded quickly and Intel hopes to have the plant up and running by Friday.

"That's assuming the seismic inspection goes fine and local infrastructure continues to improve as it has the last 24 hours," Mulloy said Tuesday. "The airport is up and running, and congestion on roads was cleared."

Intel has another test and assembly facility in Pudong. That's near Shanghai on the East Coast, more than 1,000 miles away from the quake. It also has factories in Malaysia, the Philippines and Costa Rica.

In 2007, Intel broke ground on its first full-fledged chip factory in China. The plant is in Dalian, hundreds of miles north of the epicenter of Monday's quake. Intel expects the project will cost about $2.5 billion. It will make chips on 300-millimeter, state-of-the-art silicon wafers starting in 2010, the company says.

Intel rival Advanced Micro Devices has a test and assembly plant in the city of Suzhou, about 600 miles east of the epicenter. The plant was closed for inspection.

"Nobody was hurt and there was no damage," AMD spokesman Eric Deritis said. "All the employees at that building worked from home (Tuesday) because they have not safety-inspected the building yet."

Applied Materials, the world's biggest chip equipment maker, has about 400 employees in China. Its biggest facility is a research center, including a solar panel laboratory, in Xian in central China. That facility has been open about a year and employs 225 people, spokesman David Miller said.

"Back To Work'

"We had a few ceiling tiles dislodge but all of our employees are safe," Miller said. "We inspected the site and now they're back to work."

In second-quarter earnings out Tuesday, Applied met the Street's forecast of 22 cents a share, off 24% from the same quarter last year. Sales fell 15% to $2.15 billion, but beat forecasts. The Street was looking for a 16% drop to $2.13 billion.

Meanwhile, IBM and contract manufacturer Flextronics had stories similar to Intel, IBM and Applied. Flextronics said there were no injuries to employees and no damage to any of its facilities in China.

IBM employs about 13,000 people in China. It has sales offices but no factories. No employees were hurt, spokesman Fred McNeese said.

Applied donated $145,000 to the Red Cross of China to help with rescue efforts. AMD is providing $143,000 in relief funds.