DALLAS, March 14, 2011 /PRNewswire/ -- After a
preliminary assessment, Texas Instruments (TI) (NYSE: TXN) today
said its manufacturing site in Miho, Japan, about 40 miles northwest of
Tokyo, suffered substantial damage
during last Friday's 8.9 magnitude earthquake.
The company estimates it will reinstate production in stages,
beginning with several lines in May and returning the factory to
full production in mid-July, which translates to full shipment
capability in September. This schedule could be delayed if
the region's power grid is unstable or if further complications
prevent the re-start of equipment.
TI is moving quickly to shift production to other fabs and so
far has identified alternate manufacturing sites for about 60
percent of Miho's wafer production. Work is underway to
increase this percentage by moving the production of additional
products.
Specific damage at Miho includes the following:
- The infrastructure systems that deliver chemicals, gases, water
and air were damaged, and repairs should be complete in about three
weeks.
- Impact to the manufacturing equipment is unclear until
continuous power is available from the electric utility.
- Work-in-process was damaged, and the current assumption is that
about 40 percent of it can be recovered to support customers.
- The Miho building itself suffered little damage and remains
structurally sound.
Recovery began in earnest over the weekend, with teams from
Miho, Hiji, Dallas and
Malaysia on the ground, and
additional teams en route.
The Miho fab produced about 10 percent of TI's output as
measured by revenue in 2010, of which more than a third was DLP and
the remainder of which was Analog. TI expects to incur
previously unexpected expenses in the first and second quarters for
cost of recovery. In addition, the company expects some loss
of revenue in the first quarter and more lost revenue in the second
quarter. Multiple factors will affect revenue loss, including
TI's ability to move production to other factories, existing
inventory from which to meet customers' needs, the level of demand
from customers taking delivery of products in Japan, and the ability to incrementally
increase production each month at Miho. TI expects to
describe financial impact in detail at the time of its
first-quarter earnings report on April
18.
TI's fab in Aizu-wakamatsu, about 150 miles north of
Tokyo, also was damaged in the
earthquake, though equipment there already is being re-started and
full production is estimated by mid-April, assuming a stable power
supply. The company's third fab in Hiji, about 500 miles
south of Tokyo, was undamaged and
is currently running at normal capacity.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995:
This release includes forward-looking statements intended to
qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements generally can be identified by phrases
such as TI or its management "believes," "expects," "anticipates,"
"foresees," "forecasts," "estimates" or other words or phrases of
similar import. Similarly, statements herein that describe
TI's business strategy, outlook, objectives, plans, intentions or
goals also are forward-looking statements. All such
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from those in forward-looking statements.
We urge you to carefully consider the following important
factors that could cause actual results to differ materially from
the expectations of TI or its management:
- Market demand for semiconductors, particularly in key markets
such as communications, computing, industrial and consumer
electronics;
- TI's ability to maintain or improve profit margins, including
its ability to utilize its manufacturing facilities at sufficient
levels to cover its fixed operating costs, in an intensely
competitive and cyclical industry;
- TI's ability to develop, manufacture and market innovative
products in a rapidly changing technological environment;
- TI's ability to compete in products and prices in an intensely
competitive industry;
- TI's ability to maintain and enforce a strong intellectual
property portfolio and obtain needed licenses from third
parties;
- Expiration of license agreements between TI and its patent
licensees, and market conditions reducing royalty payments to
TI;
- Economic, social and political conditions in the countries in
which TI, its customers or its suppliers operate, including
security risks, health conditions, possible disruptions in
transportation networks and fluctuations in foreign currency
exchange rates;
- Natural events such as severe weather and earthquakes in the
locations in which TI, its customers or its suppliers operate;
- Availability and cost of raw materials, utilities,
manufacturing equipment, third-party manufacturing services and
manufacturing technology;
- Changes in the tax rate applicable to TI as the result of
changes in tax law, the jurisdictions in which profits are
determined to be earned and taxed, the outcome of tax audits and
the ability to realize deferred tax assets;
- Changes in laws and regulations to which TI or its suppliers
are or may become subject, such as those imposing fees or reporting
or substitution costs relating to the discharge of emissions into
the environment or the use of certain raw materials in our
manufacturing processes;
- Losses or curtailments of purchases from key customers and the
timing and amount of distributor and other customer inventory
adjustments;
- Customer demand that differs from our forecasts;
- The financial impact of inadequate or excess TI inventory that
results from demand that differs from projections;
- Impairments of our non-financial assets;
- Product liability or warranty claims, claims based on epidemic
or delivery failure or recalls by TI customers for a product
containing a TI part;
- TI's ability to recruit and retain skilled personnel; and
- Timely implementation of new manufacturing technologies,
installation of manufacturing equipment and the ability to obtain
needed third-party foundry and assembly/test subcontract
services.
For a more detailed discussion of these factors, see the Risk
Factors discussion in Item 1A of TI's most recent Form 10-K.
The forward-looking statements included in this release are
made only as of the date of this release, and TI undertakes no
obligation to update the forward-looking statements to reflect
subsequent events or circumstances.
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TXN-F
SOURCE Texas Instruments