The Japan Tohoku earthquake has rattled the global semiconductor supply chain as chip buyers, fabrication facilities, and equipment and materials suppliers work overtime to re-establish output, inventories, customer orders and support.
While the Tohoku earthquake was one of the worst on record to strike a heavily populated area, the impact on the supply chain is due more to the aftermath tsunami and power outages resulting from the nuclear crisis. Fabs have long been constructed to stringent seismic-safety standards; however, fabs, chemical plants and other facilities cannot operate without a stable source of electrical power. Intermittent power supplies have also impacted the transportation infrastructure. Consequently, it is still uncertain when production capacities will return to normal as authorities restore power generation facilities and repair the power distribution grid.
Nearly all of Japan’s semiconductor producers have made public announcements about earthquake’s impact on their fabs and the status of their facilities. Key suppliers to the semiconductor industry have also used their websites to communicate to their customers on their production status. SEMI has compiled these announcements, with daily updates. Click here for the latest spreadsheet.
Most semiconductor products used today have established second sources, typically coming from another country. For example, while Toshiba’s flash memory fabs located in Japan produce over 30% of the world’s output, South Korean companies produce nearly identical products and will be able to meet some short-term disruptions. Nokia on March 21 acknowledged some supply chain disruption, but stated, "We are in constant dialogue with our suppliers and with their extended supply chain in the region. Nokia's supply chain management system is designed to mitigate operational disruptions by using alternative sources for components and production processes. In an effort to minimize the impact, Nokia will continue working with suppliers inside and outside of Japan."
Pacific Crest analyst Andy Hargreaves recently commented on Apple’s supply chain situation (Forbes): “Supply-chain investments, cash balance and tier-1 status should help Apple retain access to key components. Apple will be adversely affected if damage to facilities and rolling blackouts impair supply of key components for an extended time.”
Qualcomm said last week that is does "not foresee any significant impact in our ability to supply product to our customers due to the events in Japan." The wireless chipset maker added that it has "multiple, geographically diverse sources for supply as well as production processes specifically designed to enable us to mitigate disruptions in our supply chain."
Hewlett-Packard’s top purchasing executive, told the New York Times, that, “It’s too early to tell, and we’re not going to pretend to predict the outcome.”
Among the materials and equipment supply chain, a significant threat to global customers may be raw silicon wafers. Two factories that have been affected —one Shin-Etsu plant and one MEMC plant—account for 25 percent of the world’s silicon wafer capacity. The Shin-Etsu's facility in Shirakawa produces 300-mm wafers. According to Japanese equity research firm Nomura Securities Co. Ltd., there has been an oversupply of silicon for some time now and the firm's analysts believe this interruption may only serve to push supply and demand back into balance (reported from EETimes).
March 21, 2011