Foxconn explosion not to critically affect S. Korean firms

By Kim Young-gyo HONG KONG, May 24 (Yonhap) -- An explosion at Taiwan-based electronics manufacturer Foxconn Technology Group's Chinese production site will likely have a limited impact on South Korean parts makers as they are less exposed to the production site, analysts said Tuesday. Two casualties and 16 injuries were reported last Friday at the southwestern Chinese city of Chengdu after an explosion occurred at a Foxconn plant there. The production site has been used in the production of Apple Inc.'s latest tablet computer, iPad 2. "South Korean parts makers will likely suffer from short-term losses, but they are not expected to be critical," said An Sung-ho, an analyst at Hanwha Securities. An explained that Apple contributes 20 percent of the total revenue Samsung Electronics Co. earns from memory chips, including NAND flash memory. Apple's purchases make up only about 8 percent of Hynix Semiconductor Inc.'s total sales. "Apple needs more memory chips for iPhones than iPads. Even if the Foxconn accident affects 10-20 percent of the iPad 2 production, Samsung will likely be affected 1-2 percent and Hynix less than 1 percent." the analyst said. Lee Seung-woo, an analyst at Shinyoung Securities, expressed a similar view. He estimated that the total global demand for DRAM chips will decrease only 0.15 percent during the April-June period while the demand for NAND memory will be affected by 1.2 percent. The disruption in the iPad 2 production could have a short-term negative impact on LG Display Co., the main supplier of the display panels for iPad products, Korea Investment & Securities' Yoon Jong-woon said. "If Foxconn is forced to stop assembling 2-3 million units of iPads, it is equivalent to LG Display's one-month supply," Yoon said. "It is inevitable that LG Display will get affected negatively." Yoon, however, said operations in Foxconn's Chengdu factory will likely normalize in a month or two, as the explosion reportedly damaged only the assembly lines, not all of the equipment.