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.