Update: Earthquake in Japan could impact IC supply

The earthquake with a magnitude 8.9 hit off the coast of Japan’s main island, Honshu, on Friday, March 11, which could significantly impact the semiconductor wafer fabrication plants in Japan, reported Jim Handy, analyst, at semiconductor research firm Objective Analysis, Los Gatos, California.

Handy says 40 percent of the world’s NAND flash and roughly 15 percent of the world’s DRAM are manufactured in Japan. A two-week shutdown would remove a sizeable share of production for each of these products, which could result in “phenomenal price swings and large near-term shortages,” he said.

The map illustrates the relationship between the epicenter of the earthquake and most of the semiconductor wafer fabrication plants in Japan.
The map illustrates the relationship between the epicenter of the earthquake and most of the semiconductor wafer fabrication plants in Japan.

In addition, since many electronics manufacturers are located in Japan, demand and consumption of these devices will be impacted as well until the earthquake damage is repaired, said Handy.

As a comparison, Handy said the Taiwan earthquake in 1999 that caused significant damage in Taipei and stopped fabs in Hsin Chu was a magnitude 7.6, less than one tenth the power of Japan’s earthquake, and the 1989 Loma Prieta earthquake that stopped production in Silicon Valley measured 6.9, or one hundredth the strength of today’s earthquake.

Handy expressed the company’s concern “for those people involved, and hopes to hear that things are not as bad as anticipated once all the damage is fully assessed.” Objective Analysis will update this information as it receives reports from the companies impacted in Japan.

Biggest impact could be components for LCD panels

The major impact on Japan’s semiconductor production is not likely to be direct damage to production facilities, but disruption to the supply chain, reported IHS iSuppli, El Segundo, Calif.

IHS says suppliers are likely to run into problems getting raw materials supplied and distributed and shipping products out, which will likely cause some disruption in semiconductor supplies from Japan during the next two weeks.

The two major DRAM fabs in Japan, operated by U.S. based-Micron and Japan’s Elpida, have not been directly affected, according to preliminary indications from IHS iSuppli contacts.

The more important impact may be on Japan’s production of components for LCD panels, said IHS. 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 (CCFLs) and light-emitting diodes (LEDs), according to the market research firm.

The IHS iSuppli Japanese display research team has issued a preliminary analysis that the Sharp fab (only 10th Generation LCD fab) has not been directly impacted by the quake due to its remote location. Only one large LCD fab may be in the zone of peripheral impact by the quake, said IHS.

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