How Japan Earthquake Affects the Global Memory Supply Chain
3/14/2011 by: John Oram
As this is written, it is early Tuesday morning in Japan (UTC/GMT +9 hours). Thus the information below is based on Monday's preliminary reports. Memory chip prices surged Monday, underscoring concerns that global technology firms will have to contend with higher component costs and product shortages.
Cargo containers were thrown away by Tsunami like kids toys... Picture Credit: Itsuo Inouye / Associated Press
iSuppli said companies headquartered in Japan generated $63.3 billion in microchip revenue in 2010, representing 20.8% of the worldwide market. During the week a clearer picture will emerge. At least a dozen fabs in northern Japan remain off line and some companies have reported that employees sustained injuries.
On Monday, Trendforce is reporting their survey of Japanese DRAM, LCD, LED, solar, and battery manufacturers shows the earthquake and resulting tsunami "not only seriously influences information supply chain, but also becomes an obstacle to the economic resurgence in Japan. It is expected that it will decrease the growth of other economies in the short term."
The quake took out the nuclear power generation facility at Fukushima I Nuclear Power Plant. This means the power supply of northeastern Japan is severely restricted and will remain so for at least the next two weeks.
Based on Trendforce information, the silicon wafer fabs of Shin-Etsu Semiconductor and SUMCO suffered damage to their production lines. The power outage has forced the production to come to a stop. Because transportation north of Tokyo has come to a virtual stop, the supply for silicon wafer will drop significantly, which will cause the global semiconductor players outside of Japan to compete for material.
According to DRAMeXchange, "Shin-Etsu Semiconductor primarily provides 12" silicon wafer, and 95% of these silicon wafer is for the semiconductor industry. Shin-Etsu Semiconductor is a major wafer silicon supplier to Elpida and Toshiba. Japanese semiconductor companies are still evaluating the current situation. For the spot market, Samsung and Hynix both have also stopped providing price information. For Taiwanese companies, PSC has ceased quoting DRAM spot prices, and is now waiting to learn more about the current situation to make necessary adjustments. Nanya Tech is also waiting to take necessary action after they finished evaluating the situation. The spot price in China has started increasing because the expected supply is likely to be affected. The overall spot market will reflect the market tension after most have returned to their work on Mar. 14. Japan's devastating quake will affect the production of DRAM.”
EnergyTrend, a research subsidiary of TrendForce focusing on the green energy industry, indicated that most solar cell manufacturers such as Sharp, Sanyo, and Kyocera are gathered in the Kansai area of Japan. Therefore, the impact of quake was minimal.
The LED manufacturing process is mostly based on chemical reactions and is relatively shockproof, thus the effects caused by the earthquake appear limited. The two leading LED manufacturers in Japan – Nichia and Toyoda Gosei are far from the disaster area in northeast Japan. According to LEDinside’s inquiry at these two manufacturers, not much damage has been done. SDK’s LED production line is located in Chiba, where it is undetermined whether or not power blackouts and power cuts will affect the production line.
Toshiba announced that it was shutting down power consumption of businesses not providing essential services at the request of Tokyo Electric Power Company.
EETimes has more information here and here.
Trendforce, DRAMeXchange, LEDinside, EETimes, iSupply, Shin-Etsu Semiconductor, SUMCO, Elpida, Toshiba, Nanya Tech, Nichia, Toyoda Gosei, Sharp, Sanyo, Kyocera, nuclear, DRAM, LCD, LED, memory, solar, battery, silicon, wafer, Japan, Japanese, Fukushima, Chiba, Kanzai, Kansai
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