Japanese technology industry may take months to recover from quake damage

The disaster in Japan is wreaking havoc with industrial manufacturing and supply, with reports from technology companies suggesting it will take months to get back on track.

Japan manufactures around 15% of the technology that goes into our gadgets, according to TechEye. While the bulk of tech gear is made elsewhere, Japanese suppliers have a dominant position making certain key, high-end parts, such as glass for flat panels. Japan also manufactures 60% of the world’s silicon wafers, which make the base for semiconductor chips.

While the damages to the factories themselves may be less severe, there are major problems related to road and power infrastructure meaning factories may be closed for some time. This means prices for components such as flash memory, DRAM computer memory, microcontrollers, transistors and solar cell components have already increased in anticipation of a squeeze. LCD screens in particular are expected to be in for a shortage.

Pipeline
As the tech component pipeline is still being replenished following the slump in production caused by the recession, there is currently only about two weeks worth of excess built into the global supply chain. Because of this lag, the shortages won’t be felt until the end of March or the start of April. But the consequences will linger for months afterwards, and the effects on pricing is already starting to be felt.

Components giant Texas Instruments has a large semiconductor chip manufacturing site in Miho, about 40 miles northwest of Tokyo, and the plant has suffered substantial damage. Production will not be reinstated until May at the earliest, the company said – full capacity is not expected until mid-July and full shipment capability not expected until September. And this is assuming no more problems arise and that the power grid surrounding the plant is not too damaged.

Reduced output
Toshiba said shipments of NAND flash memory from its Japanese plant would be hit, and Panasonic has a LCD TV factory near the quake site. Hitachi has had to close at least one manufacturing plant as a consequence of infrastructure damage, which could affect the availability of displays for LG mobile phones and Nintendo DS handheld videogames. Samsung also expects output to be affected, but expects be able to partially compensate by utilising its South Korean plant.

Intel said in a statement on Monday that most of its materials can be sourced from other countries, and it does not expect to face shortages following the disaster; “Our supplier base is fairly diverse in Japan as well and most of the impact [from the quake] is being felt in the north-east of the country.”