We cant control nature power such as earthquakes and tsunamis but we can learn to live with them and I think Japan learned with the hard way in all these years , to live with the earthquakes. The disaster came and demolish Japan from the sea. I dont think there is a place in the world we can easy say "here is a stable place , lets built our factories here ."
If we follow all the necessary safety "guides" and have in mind when we do business that its not all about money , we can have then a "stable" environment.
From my point of view I think is wrong also not to apply a spread risk policy and to built all your units in a specific place only because there they have low cost in working hours and with this way you will have a competitive final product.
Definitrly i agree with you, Few chips / products can only be manufactured at certain places similarly lot of efforts have gone to set up such a high- tech manufaturing companies and hence it will need enormous efforts to establish the same set up therefore i feel for few more years Japan will still be the location.
“The Japanese earthquake has resulted in the suspension of one-quarter of the global production of silicon wafers used to make semiconductors. Manufacturing operations have stopped at Shin-Etsu Chemical Co. Ltd.’s Shirakawa facility. MEMC Electronic Materials Inc. also stopped manufacturing at its Utsunomiya plant. Together, these two facilities account for 25 percent of the global supply of silicon wafer used to make semiconductors. Wafers are thin slices of silicon that serve as the substrate of semiconductor devices. All semiconductors are built on wafers.
The facility in question Shirakawa facility produces large 300mm wafers, which are used in more advanced semiconductors that have high transistor counts. The wafers made by this facility mainly are used in the manufacturing of memory devices, such as flash memory and DRAM. Because of this, the global supply of memory semiconductors will be impacted the most severely of any segment of the chip industry by the production stoppage. Logic devices represent the next largest use of these wafers.”
This is just one of many instances that demonstrates the difficulties of having too much manufacturing concentrated in one location, Japan, which as we know is susceptible to earthquakes.
Japan has strong economy and highest level of technologies used but this may not be the same case in the future. Considering the fact that Japan is very susceptible to lot of natural calamaties might bring down the interests of the new ventures. Thers is going to be lot of changes in the coming few years.
Certain products can only produced by Japanese companies, partly because the manufacturing process has been finetuned for many years to reach certain level of perfection. It is really challenging to establish similar process in other Asian countries.
You made a good point on that,there is a reason(s) why we have so manufacturers in Japan today and that reason may still be strong enough to have japan as the main location for these manufacturers but then, this same place is highly prone to natural disasters- If that is the case, there is need to spread sub-manufacturing stations somewhere else to serve as backup when the main location needs support. It is not a wise idea to put all eggs in one basket though.
manufacturers should look into spreading manufacturing across the rest of the world, by this they will be able to stand and maintain supply during a disaster such as that of japan.
As always the companies with deep pockets will have the resources to build exact copies of fabs and factories in more than one location. Over the course of the last two decades we have seen that many companies in the semiconductor industry cannot go it alone when it comes to manufacturing at the bleeding edge technologies. This has been a driving force for the growth of foundries.
Going forward we may well see semiconductor vendors and OEMs rely more on joint developments and the use of third parties - foundries and contract manufacturers. Thus, the supply chain will cover different regions to minimize the adverse impact of natiural disasters or other unforeseen circumstances. There will still be disruptions, but the goal will be for fast recovery.
Building back-up production plants in locations within a country or in another country altogether could be a viable possibility, and would help lower unemployment levels and strengthen the middle class wherever these facilities are built.Indeed, there are many places in the world that are not susceptible to earthquakes. Canada is one as well as parts of the U.S., but there are also places in Europe and Africa and South America that could be considered.
Spreading things out all across the Globe as you so rightly point out changes and strengthens the Global supply chain dramatically.I am sure it can and will be seriously considered in the aftermath of the Japanese disaster.
Having atleast one backup for every single function/link in the Supply Chain also becomes totally indispensable in the light these tragic events.But the question is,who is going to pour the resources to build that backup?
If my reading of Global Geopolitical currents is accurate (and I could very well be wrong);then the Winners in the Global manufacturing race today are going to be those firms who have built and implemented backups quite successfully .
We cannot assume from a single incident that an entire eco-system for manufacturing that has worked for decades is suddenly inadequate. Japan has had problems in the past but until the recent earthquake nobody questioned its viability as a center for high-tech manufacturing and innovation. If they did, it would be only because it may not be competitive versus China and other low-cost locations. Still, as you noted, that's where the talent is and all other regions have their own problems.
We shouldn't locate too much in a single region and that may be the best antidote to natural and man-made disasters. In my opinion, Japan is less of a threat to the high-tech supply chain than China. Everything is made in China nowadays but imagine if a major destruction had hit the country. Diversification is key not total abandonment of a region or country because of a once in a life time event.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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