Like many of you, we at SolTec Electronics are all very saddened by the devastating high-magnitude earthquake, tsunami, and subsequent nuclear power plant meltdown in Japan. We express our most sincere and deepest condolences over the lost lives and suffering caused by these devastating events.
The total effect on the electronics supply chain is still being assessed. However, it is evident that most companies involved with electronics manufacturing will likely be affected in some way. Japan accounts for approximately 20 percent of all global semiconductor production, and there are already several reports of shortages and production halts from Japanese manufacturers.
Even companies that were not directly hit by the quake are affected because of power outages and transportation disruptions. Also, supply of silicon wafer will become shorter, and that could affect many product lines, even ones not manufactured in Japan.
Analysts from iSuppli have reported that "component shortages, caused by the Japanese earthquake, are not likely to appear until the end of March or the start of April, but the shortages and their price impact are likely to linger until the third quarter."
We wanted to share a few updates that have come through from several major manufacturers:
Silicon wafer fabs Shin-Etsu Chemical Co. Ltd. and Sumitomo Mitsubishi Silicon Corp. (SUMCO) have sustained damage to their production lines, and the power outage has forced production to come to a stop. The traffic for areas east of KantŰ has also been affected. As a result, the supply for silicon wafer will drop significantly, which will cause the global semiconductor players outside of Japan to compete for material.
- Texas Instruments Inc. (NYSE: TXN)'s manufacturing plant in Miho, Japan, which is responsible for 10 percent of TIís outputs, has been significantly damaged, affecting completed products and work in progress. It will likely take until September to get these plants operating at full production as normal. This will likely cause pushed-out lead times for TI products, especially DLP and Analog.
- Maxim Integrated Products Inc. (Nasdaq: MXIM)'s partner plant in Sakata (Seiko Emerson) has been affected by the power outages, and Maxim is currently in the process of shifting production to another facility.
- Samsung Electronics Co. Ltd. (Korea: SEC) and Hynix Semiconductor Inc. have stopped providing spot pricing for now as they wait to assess the current situation.
- Renesas Electronics Corp. (Tokyo: 6723) has temporarily shut down production at 7 out of 22 plants.
- DRAM production has been significantly affected, especially for PC and system manufacturers.
- Hitachi Ltd. (NYSE: HIT; Paris: PHA) and Panasonic Corp. (NYSE: PC) LCD fabs have both been affected, at least temporarily
- Toshiba Corp. (Tokyo: 6502)'s assembly line, near Tokyo, will be closed for at least one month. Mobile phone industry and auto industry for car navigation displays will be most affected.
- Murata Manufacturing Co. Ltd. has announced that three of its facilities have been affected by the earthquake. Affected product lines include: EMI Supression Filters, Coils, Piozelectric Products, Saw Filters, and Polymer capacitors. Murata has not yet released an estimated timeline on the restoration process; it's expected there will be at least some halt to production in the short term.
- NAND Flash produced in Japan accounts for nearly 40 percent of the entire global supply, and experts predict that shortages are imminent.
Most large OEM and EMS companies currently are currently assessing their material needs for the second and third quarters and taking actions to ensure they will be able to secure the materials they need for production. Some companies may try to stock their shelves full now, in preparation for potential shortages and price increases. Others might try their luck and wait it out.
When the shortages hit, OEMs may have to turn to independent distributors and try to secure the parts through the excess market. In this case, it is important for them to turn to a reputable distributor with certifications such as ISO 9001 & ESD S20.20. Also, they should have testing capabilities in place, to ward off potential counterfeits, which are always prevalent in cases of shortage or obsolescence.