The massive earthquake and tsunami that hit Japan on Friday is not likely to cause any direct damage to Japan’s semiconductor manufacturing facilities, but it could disrupt the whole supply chain in the chip-making business, a US market researcher said.
As all of Japan’s major ports remained closed and transportation systems near quake areas were handicapped, “suppliers are likely to encounter difficulties in getting raw materials supplied and distributed and shipping products out,” IHS iSuppli said in a statement on Friday.
“This is likely to cause some disruption in semiconductor supplies from Japan during the next two weeks,” iSuppli said, and this would also mean short-term price fluctuations amid a supply shortage.
Japanese suppliers accounted for more than one-fifth of global semiconductor production last year.
Chip companies headquartered in Japan generated US$63.3 billion in revenue last year, representing 20.8 percent of the global market, iSuppli said. Of the 300 semiconductor suppliers tracked worldwide by the researcher, 39 are based in Japan, it added.
Based on the researcher’s preliminary assessment of Japan’s situation, disruption in the production of NAND flash memory chips would be more substantial than that of DRAM memory chips.
NAND flash chips are used in consumer electronics such as smartphones and tablets, while DRAM chips are mostly used in PCs. Japanese companies accounted for 35 percent of global NAND flash production in terms of revenue last year, iSuppli’s data showed.
Toshiba Corp, a major NAND flash memory maker, has shut down a plant and evacuated employees in Iwate Prefecture, one of the hardest hit areas.
Keisuke Ohmori, a company spokesman, told Bloomberg News yesterday there was no damage at the Iwate Toshiba Electronics Co plant, which produces logic chips and CMOS image sensors for mobile phone cameras.
Japan’s DRAM manufacturing accounted for around 10 percent of the worldwide supply last year in terms of wafer production. ISuppli said the two major DRAM fabs in Japan, operated by Japan’s Elpida Memory Inc and Micron Technology Inc of the US, had not been directly affected by the earthquake and were checking availability of major materials.
UMC Japan, a memorychip unit of United Microelectronics Corp (UMC, 聯電) based in Tateyama City in Chiba Prefecture, reported no casualties after a magnitude 5 quake hit the area on Friday, UMC said in a stock exchange filing on Friday night.
The Hsinchu-headquartered company, the world’s second-largest contract chipmaker, said the output of its Japanese unit (about 20,000 eight-inch wafers per month) accounted for only between 3 percent and 5 percent of the company’s total capacity and it expected no financial impact from the quake, according to the filing.
In iSuppli’s preliminary assessment, the researcher also highlighted the possible impact on Japan’s LCD panel industry, saying that the more important impact may be on the production of components for LCD panels and shipments of LCD TVs, rather than the flat-panel fabs operated by Sharp Corp and other companies.
“Sharp fab has not been directly impacted by the quake, given the remote location of the fab,” iSuppli said. “Japan accounts for a very high share of components uses in LCD panels and LCD-based products, including glass, color filters, polarizers, cold cathode fluorescent lamps and light-emitting diodes.”
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