The Impact of Japan’s Triple Disaster

Pete Singer
Editor-in-Chief

At press time (March 15th), all thoughts are of Japan and the country’s well-being after a triple disaster on March 11th, with a 9.0 earthquake and tsunami, followed by major nuclear reactor malfunctions. My heart goes out to all my friends and colleagues and their families in Japan, and their collective loss. By the time you read this, I hope that some semblance of normalcy has returned. Given the critical status of Japan in the world’s economy, particularly in the semiconductor and related industries, I’m sure the shock will be long lasting.

Even as thousands remain missing, and rescuers desperately try to reach tens of thousands of people in need of basic human necessities, the world begins to look at the financial impact of the disaster. This includes the status of Japan’s many production facilities and how almost guaranteed shortages will affect the supply chain of everything from "chips to ships." Plant closures and production outages among Japan’s high-tech companies, combined with port closures, are among the biggest threats to the supply chain, reports Reuters, as an estimated fifth of all global technology products are made in Japan.

Japan in 2010 accounted for 13.9% of all global electronic equipment factory revenue, according to a preliminary IHS iSuppli estimate. This includes manufacturing of all electronic equipment, including computers, consumer electronics devices and communications gear. Japan produced $216.6 billion worth of electronic equipment in 2010, compared to $1.6 billion worldwide. Japan accounted for 16.5% of global consumer electronics equipment factory revenue in 2010. The country represented 10.2% of worldwide data processing revenue in 2010.

Japanese suppliers accounted for more than one fifth of global semiconductor production in 2010. Companies headquartered in Japan generated $63.3 billion in microchip revenue in 2010, representing 20.8% of the worldwide market. While not all of this actual production is located in Japan, a large percentage is produced in manufacturing facilities in Japan.

At press time, rolling power blackouts are set to hit Tokyo and surrounding areas over coming weeks, adding to the challenge of inspecting and repairing northern Japan plants amid continuing aftershocks and the threat of radiation leaks from damaged nuclear power plants.

Early reports are that, in general, most production facilities shut down temporarily, but had minimal earthquake damage. The epicenter of the powerful earthquake was approximately 500 miles from Yokkaichi, Mie Prefecture, Japan, the location of the two Toshiba-SanDisk joint-venture semiconductor manufacturing plants, Fab 3 and Fab 4. Both fabs were down for a short period of time due to the earthquake but were reported to be soon back up and operational. There were no injuries to SanDisk employees based in Japan. SanDisk said there was minimal immediate impact on wafer output due to the earthquake.

The Samsung/Toshiba fab in Yokkaichi, Japan, which supplies over 40% of the world’s NAND flash and DRAM chips, was also stopped during the earthquake, but was soon back up and running.

Renesas, one of the harder hit companies, said production halted at seven of its 22 chip plants: five front-end lines in Aomori, Yamagata, Ibaragi, Gunma, and Yamanashi Prefectures, and two back-end lines in Aomori and Yamagata. Eight factories (including some of those) will be impacted by the rolling blackouts.

At Shin-Etsu (SEH), operations were halted at its sites in Annaka/Gunma Prefecture, Kamisu/Ibaraki Prefecture, and Nishigo Village/Fukushima Prefecture. The Gunma sites have passed safety checks and have restarted operations, though may be affected by rolling blackouts; the other two sites are still continuing safety inspections (as of March 15th).

At Sony, operations at six plants were suspended in Miyagi, Fukushima, Saitama, and Ibaraki prefectures, spanning everything from semiconductor lasers to Li-ion batteriers to surface mounting equipment to optical devices to Blu-ray discs. Other Sony sites in Tochigi and Kanagawa prefectures voluntarily suspended operations to help alleviate overall power outages.

No country in the world was better prepared for an earthquake (and is there any way to adquately prepare for a murderous tsunami?). Despite staggering and tragic losses, Japan is a nation of determination that will quickly recover.

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