Effect of Japan Quake on Semiconductor Industry Still Unclear
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Japan's semiconductor industries have far-reaching effects, say two new reports, both of which suggest the impact of the recent disasters are still not fully known.
The semiconductor industry in Japan continues to remains a question mark for industries affected by production slowdowns resulting from the 9.0-magnitude earthquake and the tsunami that hit the country March 11.
Nearly 25 percent of the world's
semiconductor production capacity is in Japan, and more than 60 percent of the
silicon wafers that semiconductor chips are created from are made in Japan,
according to a March 24 report from Objective Analysis. Vendors, not wanting to
spook investors, have been slow to release information about their facilities.
But for now, the two variables undeniably in need of stability are people and
industry, said Tom Starnes, author of the Objective Analysis report.
As the people of Japan struggle to
regain some sense of normalcy, business has naturally become a lower priority.
"Nonetheless, we have reports
of many dedicated semiconductor employees returning quickly to their places of
business after securing their homes," wrote Starnes. "Meantime, the
increasing threat of radioactive emissions from stressed nuclear power plants
has many people scrambling to get to the far end of the island."
Rolling blackouts, whether planned
or not, are also an issue for an industry whose delicate processes require
sustained conditions, Starnes added, echoing a March
17 report from IHS iSuppli.
Starnes said that Texas
Instruments has reported sustained physical damage to one of its fabs that will
limit production, if not put it out of operation, for three to six months. Since the
equipment is built to spec, parts aren't easily replaced, making quick repairs
difficult.
Renesas, the world's largest
producer of microcontrollers, formed from the former Hitachi, Mitsubishi and
NEC semiconductor operations, has six or seven facilities that have been hard
hit or shut
down. The effects of such shutdowns are likely to be felt by a number of
industries.
"Nobody wants a $35,000 car
to be parked on a production line waiting for a shipment of $5.00 microcontrollers
that are programmed properly, or a hit Christmas toy to be out of stock until
after the new year," wrote Starnes.
According to March 24 report from IHS iSuppli, in 2010
Japan accounted for 35 percent of the $31.5 billion automotive infotainment electronics
market and produced $11 billion worth of infotainment electronics. Japanese
producers were also responsible for 32 percent of the $22.9 billion worldwide
market for automotive semiconductors, and its chip production for the auto
industry totaled $7.3 billion last year.
While Freescale Semiconductor and
Fujitsu, in addition to TI and Renesas, are located in the area of Japan hardest hit by the
disasters, "many of these companies also have manufacturing operations in
other locations such as Mexico, so the total impact of the production
disruption on output is unclear," states the IHS iSuppli report.
It added that a number of
sources have said that inventory may be enough to make up for immediate
component needs, as "most suppliers have a good understanding of how long
it will take before they run out of parts."
Apple, for example, announced
March 23 that its iPad 2 will begin shipping to 25 additional countries
beginning March 25. As the tablet, according to a teardown, includes at least five
components from Japanese manufacturers - Toshiba, Elpida Memory, AKM
Semiconductor, Apple Japan and Asahi Glass - the announcement suggested
that Apple for now may be confident in its suppliers' inventories.
"It is hoped that Japan's
semiconductor manufacturing, as well as the Japanese people, can get back on
their feet quickly," wrote Starnes. The world needs them.
