Japan in shambles rattles global supplies

Tsunami aftermath: Disaster leaves economy in tatters

The earthquake has forced many firms to suspend production. With initial damage assessments still being made, companies and analysts said it was too early to accurately gauge how long disruptions might last.

Rolling power blackouts are likely to affect Tokyo and surrounding areas over the next few weeks, adding to the existing challenge of inspecting and repairing north Japan plants amid continuing aftershocks.

Japan is a major electronics manufacturer, accounting for 14 per cent of the global production of computers, consumer electronics and communications gear last year, according to research consultancy IHS iSuppli.

Companies in neighbouring South Korea, which depend heavily on Japan supplies such as LCD glass, chip equipment, silicon wafers and other products to produce semiconductors, were some of the most affected. Hynix Semiconductor, world’s No 2 memory chipmaker and a rival of Japan’s quake-hit Toshiba Corp and Elpida Memory, said it was concerned the quake may weaken consumer demand further and disrupt supplies of chip components.

“It could give a boost to battered chip prices but that’s a short-term impact from disrupted supplies by Japanese companies,” said Kim Min-chul, Chief Financial Officer at Hynix. “Longer-term we are more concerned about the quake reducing overall consumer demand and disrupting supplies of chip components and equipment, which could interrupt our production as well.”

Toshiba, which supplies more than a third of NAND memory chips used worldwide in devices such as Apple’s hot-selling iPad, said it was starting the process of restarting a chip factory in Iwate, northern Japan.

Japan’s Shin-Etsu, world’s top producer of silicon wafers used to make semiconductors and the plastic PVC, suspended operations at its Shirakawa plant over the weekend. 

“As this plant accounts for just over half of Japan’s production of 300mm wafers for semiconductors, protracted stoppage could have substantial impact on the semiconductor industry.”