Japan tremors and tsunami will pass through
the global semiconductor industry
First of all, let us pray for less and less damage to people
and critical installation in Japan.
Though Japan used to nature's furies, but this one exceeded.
However this great region is robust enough to spring back
to normalcy, the question is whether its going to be weeks
or months. Let us hope the nuclear reactors not melt and
radiation falls quickly. If we talk about growing semiconductor
chip and equipment business, these tremors and the triggered
tsunami in the form of economic wave will pass through the
businesses of all major players in this business; the effect
(both by timing and the impact) may vary.
Sony (Fukushima, Miyagi), Fujitsu (Miyagi, Fukushima and
Iwate) and Renesas (Yamagata) has more semiconductor fabs
close to the epicenter, even if we pray no damage to the
fab, it takes some time (weeks) to get back to normal production.
We can expect chip shortage resulting in delay of production
lines of electronics OEMS and also much of the other major
industries whose dependency on semiconductor device is increasing.
One good trend is some of the Japanese chipmakers are becoming
fablite, mainly Renesas and Fujitsu. Last year Renesas Electronics
said it plans to use outside foundries on all of its 28
nanometer (nm) and smaller geometry semiconductor products.
In line with this change, the company has positioned the
300 millimeter (mm) wafer lines at Naka plant and Renesas
Electronics Yamagata Semiconductor's Tsuruoka plant as manufacturing
facilities for the company's basic products, especially
for systems-on-chips (SoCs) up to 40nm, and MCUs that are
expected to further miniaturize from their current geometries.
Toshiba has latest non-memory focused fabs at places (Oita
and Nagasaki), which are not affected by this disaster.
Good news is Toshiba has announced it has resumed operations
of its main NAND facility in Yokkaichi near Tokyo. But there
will be supply issues related to base materials used in
fabs, where much of it is locally supplied, mainly the silicon
wafers.
The impact can be both short term as well as long term
affecting not only the semiconductor supply chain but also
nearly every other industry, because you hardly find an
industry, which don't use chips. Car production can be held
by one single chip and Japan produces lot of cars and automotives.
Japan has major share in semiconductor equipment, chips
and consumption of chips.
At this stage let us pray first for the safety and well
being of the people who can set their machines right.
According to the survey conducted by research divisions
of TrendForce on information technology (IT) supply chain
(publisher of Dramexchange, the earthquake which struck
northeast Japan on March 11th not only seriously influences
information supply chain, but also becomes an obstacle to
the economic resurgence in Japan. It is expected that it
will decrease the growth of other economies in the short
term.
Here below are the details of this survey:
Based on the sources and check of DRAMeXchange, the semiconductor
research division of TrendForce Corp., the operation of
the primary nuclear power plant in northeastern Japan has
come to a stop due to the recent devastating earthquakes.
The residents near Fukushima I Nuclear Power Plant have
been evacuated. Additionally, Unit #1 and Unit #3 have been
infused with Boric acid, so these two units are now completely
obsolete. The power supply of northeastern Japan has become
a huge issue. Starting from Mar. 14th, the operation of
the industrial area in the northeast will be severely affected,
and it is expected that limited power supply or complete
power outage will continue for the next two weeks. Kanto
and the industrial areas in the northeast will be facing
limited power supply or complete power outage, but plans
on how to distribute already-limited power have been made.
What's worth noting is that silicon wafer fabs, Shin-Etsu
Semiconductor and SUMCO, are affected most. In addition
to damage of their production lines, the power outage has
forced the production to come to a stop. The traffic for
areas east of Kanto 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.
According to DRAMeXchange, Shin-Etsu Semiconductor primarily
provides 12" silicon wafer, and 95% of these silicon
wafer is for the semiconductor industry. Shin-Etsu Semiconductor
is a major wafer silicon supplier to Elpida and Toshiba.Japanese
semiconductor companies are still evaluating the current
situation. For the spot market, Samsung and Hynix both have
also stopped providing price information. For Taiwanese
companies, PSC has ceased quoting DRAM spot prices, and
is now waiting to learn more about the current situation
to make necessary adjustments. Nanya Tech is also waiting
to take necessary action after they finished evaluating
the situation. The spot price in China has started increasing
because the expected supply is likely to be affected. The
overall spot market will reflect the market tension after
most have returned to their work on Mar. 14. Japan's devastating
quake will affect the production of DRAM. Especially for
PC and system manufactures, they need to be more proactive
in DRAM inventory for the upcoming peak season, so that
the outlook for the contract market will start to look rosy.
Toshiba's NAND production line, based on DRAMeXchange's
investigation, only has a minor setback; however, due to
the impact on material supply, traffic, and Japan's basic
construction, Toshiba is still trying to evaluate the consequences
that will likely to come soon. Toshiba's 12" plant
in Iwate Prefecture produces logic IC and consumer IC primarily.
Due to its close proximity from the epicenter, the production
in Iwate Prefecture will be affected severely; the memory
production plans in Kansai area are with minor damage. The
Fab3 and Fab4 of the Flash memory plants by Toshiba and
SanDisk have not yet been confirmed to have serious damage,
because they are located about 800 miles away from the epicenter.
Nevertheless, the production at Fab3 and Fab4 is rather
precise and delicate; based on SanDisk's official statement,
the production did stop temporarily but no employee was
hurt. A more comprehensive damage report is expected to
be released on Mar. 14.
Based on past experience, DRAMeXchange believes that manufactures
will evaluate their fab equipment and make necessary repair.
Although the over semiconductor production line was not
severely damaged, the material supply and basic traffic
reconstruction will impact more on the supply of semiconductor
than production line damage. The overall supply is expected
to be affected for the next two weeks due to traffic difficulties.
EnergyTrend (Solar, Battery):
In addition, EnergyTrend, a research subsidiary of TrendForce
focusing on green energy industry, indicated that most solar
cell manufacturers such as Sharp, Sanyo, and Kyocera are
gathered in kanzai area of Japan. Therefore, the impact
of quack was contained to minimal. According to Sino American
Silicon Products Inc., production lines of its customers
were unaffected. As for poly silicon, Tokuyama and M.Setek
are the two Japanese companies producing the product. However,
their global market share is not significantly large enough
and the impact is still under investigation. Because M.Setek
(partly invested by AUO) is close to the afflicted region
which is near Sendai and Souma, staffs of the company were
evacuated from plants and facilities were shut down due
to electricity black out.
EnergyTrend believes that the impact on solar cells and
modules is very limited and the domestic demand might increase.
Supply of 12" wafer might be affected and the subsequent
influence on 8" and 6" is still under observation.
Though poly silicon production from the aforementioned two
companies is just a small portion of global supply, the
continued increase of price of poly silicon might be accelerated
due to sentimental reasons.
Sony at the same time also evacuated staffs from its plants
in north-eastern Japan. Because of electricity black out,
production of Blu-ray discs, magnetic heads and batteries
will impacted. Though the impact on supply is temporarily
insignificant, Korean and Taiwanese battery makers might
see increased orders. From the viewpoint of the battery
industry as a whole, EnergyTrend believes that Korean and
Taiwanese battery protection IC manufacturers might be benefited,
because Seiko's plant shutdown will be the most influential
impact on the overall supply. Mitsubishi's plastic materials
account for a small portion of the market share, its absence
can be taken care of by other manufacturers. Battery cell
sector still suffers oversupply, the impact of Sony's plant
shut down depends on its recovery schedule.
For the battery industry, the impact is widespread from
upstream to downstream. As for upstream material suppliers,
Mitsubishi Chemical and Seiko are both on the watch list.
Mitsubishi Chemical's anode powder mainly focus on NB applications
for Japanese market. Seiko's battery protection IC is used
by many NB brands, especially and dominantly Appl e's new
Ipad 2. Close observation is crucial in the aftermath of
affected material supply. Sony's battery cell manufacture,
supplying NB applications and power tools, was affected
too. For the NB applications, the shutdown of battery supply
is estimated to be 2 weeks with impact of 8M. However, because
theoretically its battery pack needs to be assembled in
China, there is still a chance that existing inventory may
be sufficient. In other words, if Sony can restart production
lines in 2 weeks with successful shipment, the impact can
be kept minimal.
Based on EnrgyTrend's observation, it is still hard for
Taiwanese battery cell and pack manufacturers to be benefited
directly from the disaster. Though supply of protection
components will definitely be affected, the main suppliers
are not based in Taiwan. Only the ones that have readily
sufficient inventory will have a chance to gain contract
for 2011 Q2. Simplo, Dynapack, and Celxpert are on the watch
list. In terms of Japanese battery supply chain, what is
worth noting are industrial recovery from damages cause
by the quake and tsunami and recovery of transportation
system.
Witsview (LCD):
As for the situation of LCD panel supply, Witsview, a research
division of TrendForce, indicates that most major LCD panel
manufacturers are at Kansai region, Japan. Therefore, not
much damage has been done to LCD panel manufacturers. In
regard of relevant product chains of Japanese panel industry
such as LCD panel, glass substrate, color filter and polarizer,
their manufacturers are located in western Japan, including
Osaka, Kobe, Kyushu, and Hiroshima areas.
Due to the fact that those areas are far from epicenter,
no effects caused by the earthquake has been reported so
far. Sharp's TFT-LCD production line is working smoothly
as well.
However, the effects caused by the earthquake in Kanto region
may inevitably shut down PLD(origin IPS)six-generation fab
, which is considered a closed supply chain on account of
the fact it mostly supplies Panasonic with LCD TV panels.
This IPS-a (a production line for Panasonic's TFT-LCD),
is a six-generation fab in Mobara. So far, every staff member
is safe and the cell phone reception is available; only
some factories have been affected. As for the effects caused
by the earthquake, they are still yet to be estimated.
In addition, glass substrate manufacturer AGC owns an old
furnace in Yokohama, Kanagawa, which the staff member responds
that it needs to wait until March 14th to have an appraisal
report regarding the state. The major concern among industry
is about Corning Japan located in Kakegawa, Shizuoka, whose
capacity accounts for 70% of total capacity of Corning Japan.
But on March 11th, Corning issued an statement saying there
is no damage regarding staff members and equipment and it
should take about half a day to a day on examination before
the production line restarts. As for color filter manufacturers
Toppan and DNP, which own 3.5-generation ~ 4th-generation
in Niigata and Saitama, the states are still indefinite.
But due to the fact that they are old generation, it is
expected that they will not affect industry supply chain
much.
Witsview believes that as serious as the outcome caused
by earthquake is, in general, it did not harm the core of
TFT industry. Therefore, the damage it brings to the panel
market is limited.
LEDinside (LED):
Ledinside points out due to the fact that, unlike semiconductor
manufacturing process, the manufacturing process in LED
industry is mostly regarding chemical reactions and is shockproof,
the effects caused by the earthquake are limited. The two
leading LED manufacturers in Japan - Nichia and Toyoda Gosei
are far from the disaster area in northeast Japan. According
to LEDinside's inquiry at these two manufacturers, not much
damage has been done. SDK's LED production line is located
in Chiba, where whether the power blackouts and power cuts
affect the production line is still waited to be confirmed.
According to TrendForce, Japan's economy is strongly impacted
by the earthquake, and is now in need of reconstruction.
Comparing to the 13 trillion Yen which was used to reconstruct
the earthquake that hit Osaka, the amount for reconstruction
this time is estimated to be more because of the countries'
demand for steel, cement, glass and automation. In the IT
field, supply chain has been impacted and the overall market
view is negative. For the newly launched iPad2, sales in
Japan will decrease.
Kansai Electric power will support the short-term power
shortage in East of the Kanto. Japan's industrial output
is bound to be affected and the impact of relevant supply
chain shipments is worth observing.
To read the source visit: http://press.trendforce.com/en/node/1136
