Analysts warn over chip supply chain delays after Japan quake

The earthquake in northern Japan last week could damage the semiconductor industry and chip supply chain.

Japan accounts for 14% of all global electronic equipment factory sales in 2010, according to research firm, IHS iSuppli. The firm predicts damage will be caused to the electronics industry supply chain as companies, such as Sony, Panasonic, Sharp and Sanyo, halt production of LCD glass, silicon wafers and NAND memory chips.

It remains to be seen how consumer electronics devices like tablets, laptops, digital cameras and mobile phones will be affected, but experts are warning that the supply chain disruption may adversely affect the electronics products introduced by new entrants to the market.

"Suppliers are likely to encounter difficulties in getting raw materials supplied and distributed and shipping products out. This is likely to cause some disruption in semiconductor supplies from Japan during the next two weeks," said iSuppli in a statement.

Andrew Buss, services director at Freeform Dynamics expects component prices to increase. He says manufacturers may also face shortages of key components. Companies attempting too bring new products to market may struggle to source components.

Along with electronic component supply chain issues, the BBC is reporting a speech from Japan's Prime Minister Naoto Kan, in which he warns the shutdown of several nuclear reactors is likely to lead to a shortfall in electricity supply.

"Electronics companies can survive on spoilt production, as long as [electrical power] continues," Buss added.

On Friday Electronics Weekly reported that companies including Sony, Panasonic, Sharp and Sanyo have halted production and shut down operations.

Thousands of people evacuated their homes on Friday as the Japanese government declared a nuclear emergency. Latest figures suggest the death toll could reach over 10,000 after the earthquake.

SanDisk, a leader in semiconductor memory was impacted by the earthquake. "Toshiba/SanDisk accounts for one third of the Japan total [chip production] but half the world's NAND Flash production," semiconductor analyst Malcolm Penn, CEO of Future Horizons, told Electronics Weekly.

SanDisk has issued a statement after its fabrication plant was affected by the earthquake.

SanDisk said, "The epicentre of the powerful earthquake was approximately 500 miles from Yokkaichi, Mie Prefecture, Japan, the location of the two Toshiba-SanDisk joint-venture semiconductor manufacturing plants, Fab 3 and Fab 4. Both fabs were down for a short period of time due to the earthquake and were back up and operational as of Friday morning, Pacific Time. There were no injuries to SanDisk employees based in Japan. SanDisk's current assessment is that there has been minimal immediate impact on wafer output due to the earthquake. SanDisk continues to assess the situation for any potential future impact that may arise from issues related to Japanese infrastructure and the supply chain."

Network connectivity
As Computer Weekly reported last week, the mobile networks lost connectivity after the earthquake. Akamai has reported that internet traffic in Japan dropped by 27% during the earthquake. Internet monitoring firm, Renesys, says Japan's internet network was surprisingly resilient. James Cowie from Renesys, wrote in a blog post: "Of roughly 6,000 Japanese network prefixes in the global routing table, only about 100 were temporarily withdrawn from service - and that number has actually decreased in the hours since the event. It's clear that internet connectivity has survived this event better than anyone would have expected." Tetra portable and mobile radio manufacturer Sepura is supplying 50 hand-held radios and ancillary equipment to the UK International Search and Rescue Team (UK-ISAR) in support of the co-ordination of search and rescue activities. The radios will be used in Direct Mode (DMO) without TETRA infrastructure and do not require any special training to become operational.