The Taiwanese government estimates that hundreds of millions of dollars' worth of production will be lost in the microchip industry.

But the prosperous economy is expected to bounce back very quickly.

It is the effect of the earthquake on the manufacturers of computer products which has been the focus of attention in world stockmarkets.

Taiwan is one of the world's biggest producers of microchips and other computer parts, and they are a vital part of its exports.

Although most firms reported minimal damage to their facilities, in many factories production has come to a halt - because the earthquake has played havoc with the nation's electricity supplies.

Already this is having an effect on world semiconductor prices, driving them up sharply.

Rich and well organised

But production could come back on stream in as little as a week or two, as long as no structural damage is discovered.

Many of the factories are in the Hsinchu area in the North West, away from the epicentre of the quake in central Taiwan.

Other problems include collapsed bridges and damaged roads, and the stock exchange has been closed until Monday.

Companies abroad say there has been some disruption to telephone links, and an undersea cable to the United States may have been damaged.

But Taiwan is rich and well-organised and the earthquake is not expected to put much of a dent in its economic growth this year, estimated at more than five per cent.

After that the economy could even receive a boost from all the reconstruction work that will be necessary.

Contamination possible

The Taipei government says it is also helping individual victims of the earthquake with low interest loans.

Among individual firms, Taiwan Semiconductor Manufacturing (TSMC) said on Tuesday that a preliminary analysis after the earthquake indicated it may lose about 10% of this month's production.

The assessment was not final and recovery to normal operations will be a gradual process over the next few days, the company said.

Economists believe the earthquake will not derail the island's rapid economic growth as much as might have been expected because key ports and the semi-conductor businesses escaped the worst damage.

Taiwan's latest forecasts had predicted economic growth of 5.7% this year. Investment bank CS First Boston said the earthquake may trim that figure by up to 0.4%.

But with power cuts hitting manufacturing plants there could be more disruption to follow in the hi-tech computer chip industry.