by: Evelyn Iritani

Taiwan's exporters could suffer disruptions for up to a week caused by widespread power outages and the closure of the port of Taichung, but the country's trade-dependent economy is expected to recover quickly from Tuesday's earthquake.

The devastating earthquake that struck near Taipei early Tuesday doesn't appear to have caused major structural harm to Hsinchu Science-based Industrial Park, the high-tech region south of the city that is home to Taiwan's world-renowned chip makers and computer manufacturers. Damage appeared to be largely limited to power outages that have disrupted production. That is good news for the hundreds of U.S. and other foreign companies that rely on Taiwanese production. Taiwan, which has a $53-billion trade relationship with the United States, is a major supplier of electronic and computer components, textiles and chemicals, and a buyer of American aerospace products and farm commodities.

IBM, Compaq, Cisco Systems and other U.S. firms with Taiwan operations report no damage to their buildings or injuries to employees, but were still assessing their supply networks as the sun rose today on the badly shaken nation. The Taiwan government estimated hundreds of millions of dollars in lost production for domestic chip makers such as United Microelectronics Corp., Winbond Electronics Corp. and Taiwan Semiconductor Manufacturing Co.

The Taiwan stock market was closed Tuesday and was to remain shut today, but stocks of the nation's leading chip makers and Acer Inc., the giant computer firm, fell sharply in overseas trading after the quake. Fears of disruption in semiconductor production drove spot prices of some commodity chips from $14.50 to as high as $17. But some analysts doubted the price increases will hold. While the secondary port of Taichung near the quake's epicenter was shut down, Taiwan's major airports and its leading port in Kaoshiung remained open. Shippers said collapsed roads and bridges, however, could cause delays.

Observers predict Taiwan, the world's 13th-largest trading nation, will probably suffer a sharp short-term decrease in exports. But they expect a quick rebound as the government taps its ample $90-billion cache of foreign reserves to fund a massive reconstruction effort. Li-Pei Wu, the Taiwan-born chairman and chief executive of GBC Bancorp & General Bank, also noted that many of Taiwan's manufacturers--which lead the world in production of scanners and motherboards--do most of their production in mainland China.

The disaster is not expected to affect Asia's fledgling economic recovery. Indeed, in the short run, South Korea, Singapore, Malaysia and Thailand could benefit if manufacturers step up production on their shores to make up for any lost Taiwan output. Foreign companies were having trouble getting through to their Taiwan offices because telephone and fax service was disrupted and quake aftershocks damaged an underwater cable providing Internet connections between Asia and the U.S.

Thomas Chung, president of Tri-Net Technology in Walnut, was relieved that his relatives and his Taipei office escaped unharmed but fears some of the manufacturers of his computer networking cables might have been affected. "Because we have some scheduled shipments arriving soon I do believe we will have some damage," he said. "But I don't think it will be long-term." The most vulnerable are U.S. companies that design and sell microchips but hire Taiwanese partners to build them. San Jose-based Xilinx Inc. and Broadcom Corp. of Irvine are two of the most significant such players. "Seasonal PC-market demand is getting stronger, so if there's not enough component supply [such as chips for computer memory and for accelerating the display of graphic images], it could have an impact on PC prices," said Mario Morales, a chip analyst with International Data Corp., based in Framingham, Mass. However, initial damage estimates suggest that the dislocations will be short-lived.

Jim Ballingall, a vice president for UMC Group, another large chip maker, said his company's six fabrication plants in Hsinchu are now operating on emergency power, with full power restoration expected by today. He predicted no long-term dislocations in either production or shipping. Iritani reported from Los Angeles and Piller from San Francisco. Times wire services were also used in compiling this report.