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While threat of radiation to U.S. might be exaggerated, global supply chains are in danger

In addition to the loss of life and property, the main story coming out of Japan after the devastating 8.9-magnitude earthquake last week is the threat of nuclear meltdown and radiation. And while reports of the risk of its effects on the United States have been generally flawed and sensationalized, the disaster has economic implications for the entire world.

Case in point: Reuters is reporting that at least two LCD-producing assembly plants in Japan will both be out of commission for at least a month. A Toshiba Corp. plant and a Hitachi Ltd. plant are reported to be halting production of small LCDs. 

Toshiba's plant near Tokyo, which makes LCDs for smartphones, is busy repairing equipment knocked out of alignment by the quake, a Toshiba rep told Reuters. Another Toshiba plant in Japan was undamaged.

"Given that the market for smartphones outside Japan is pretty active, supply disruptions there could cause problems for some handset makers of some models," Damian Thong, an analyst at Macquarie Capital Securities told Reuters. The two Toshiba factories account for an estimated 5 percent of the global small LCD display market, he said.

Toshiba also made some of the reactors at the Fukushima nuclear plant and has experienced a 30 percent drop in its shares this week.

Meanwhile, Lenovo has expressed concerns over its parts supply. "In the short term there won't be much impact. We are more worried about the impact in the next quarter," Lenovo CEO Yang Yuanqing told reporters in Shanghai. Lenovo shares were also down -- 4.1 percent in day trading.

The regional disruptions, which have affected supplies of car parts and semiconductors as well, could threaten global supply chains and impact economic growth around the world. Key suppliers for batteries for notebook computers, such as Sony, have also shut down factories.

"Sony and Sanyo would be two of the key suppliers, and Sony has essentially shut down five or six of its factories in Japan so that's clearly going to cramp the battery supply for notebook PCs, where you see Lenovo making a big push these days. It's going to cast a lot of uncertainty over their Q2 ability to make shipments," Michael Clendenin, managing director of RedTech Advisors, told Reuters.

And it doesn't stop there. Ericsson, Alcatel-Lucent and STMicroelectronics also chimed in with warnings of limited supplies. In response, Taiwan -- whose economy is based largely on the high-tech sector -- has considered cutting tariffs on components if supply shortages continue.

"The impact from the earthquake has been limited as most companies have inventories at hand. But we're closely watching the power disruption situation in Japan. If necessary we'll consider lowering import tariffs on components," Lien Ching-chang, deputy director general of the Industrial Development Bureau of the economics ministry in Taiwan, told Reuters.

But if companies turn to suppliers outside of Japan, there could still be a struggle to meet demand. "If everyone is turning now to these secondary or back-up sources at the same time, the back-up source is not going to have the capacity to handle everything," Clendenin said.

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It was bound to happen...
By Moishe on 3/18/2011 2:54:41 PM , Rating: 2
It was bound to happen... Japan is a production powerhouse. Lots of things are gonna cost more.

On a side note, I think I see my car in that article picture! :D

RE: It was bound to happen...
By The Raven on 3/18/2011 3:24:35 PM , Rating: 2
If you look at the plates that run under Japan (and I mean subduction faults people, the crazy kind) you can see that there will always be craziness going on over there. I'm born and raised NorCal, but I swear I experienced more seismic activity during my short time in Japan then I had my entire life along the more mild San Andreas strike-slip.

RE: It was bound to happen...
By Ammohunt on 3/18/2011 3:25:27 PM , Rating: 2
Japan = 12% of the global economy! big ouch look to pay more later

RE: It was bound to happen...
By cruisin3style on 3/19/2011 4:15:27 PM , Rating: 2
Pretty sure most estimates peg Japan at less than 10%...nominal figures might be in the 8-10%, but PPP numbers will be more like 7% or less

RE: It was bound to happen...
By AssBall on 3/18/2011 4:02:46 PM , Rating: 2
With any luck the production of animated monster pr0n and game shows where people get hit in the balls will continue as scheduled.

Japanese TV is so strange.

RE: It was bound to happen...
By Moishe on 3/18/2011 4:36:59 PM , Rating: 2
Yes... but fortunately lots of those things are distributed online or already hosted over here! Yay for the interwebs!

I saw an article in the paper today that said that 75% of Priuses are made (assembled I assume?) in the USA. Of course the demand is high enough that they are still selling for sticker price.

South Korea and Taiwan have taken over a lot of the traditional Japanese production, but they are still huge. I hope they can get everything settled quickly for everyone's sake.

RE: It was bound to happen...
By BZDTemp on 3/18/2011 5:34:56 PM , Rating: 2
Not as strange as Italian TV!

Women dressed as prostitutes in pretty much every program be it news or entertainment. Oh, and the head of state owns pretty much every channel plus has arranged for laws making satellite channels extra expensive to boost his monopoly.

RE: It was bound to happen...
By Camikazi on 3/19/2011 4:26:23 PM , Rating: 2
Scantily clad women are not stranger then the alien pr0n anime that japan has :P

RE: It was bound to happen...
By Iaiken on 3/18/2011 6:51:52 PM , Rating: 1
Japanese TV is secret yankee culture poison.


Who cares?
By tayb on 3/18/2011 8:09:12 PM , Rating: 3
Are we really so conceited that this is what we are talking about? The death toll is at a confirmed 7,000 and constantly rising, there are three nuclear reactors at risk of meltdown, millions of people cold and homeless, and tens of millions without food or power. It is pretty pathetic that we are worrying how the suffering of an entire nation will effect our supply of smartphone LCD displays.

Who cares?????????????????????????????????????????????? ?????

RE: Who cares?
By UnauthorisedAccess on 3/18/2011 8:34:36 PM , Rating: 2
Goodness man, will someone please think of the technology!!!

RE: Who cares?
By FaceMaster on 3/18/2011 8:36:24 PM , Rating: 3
We're all aware of the other tragedies that are occurring over there at the moment, and let's face it, this bit of the crysis is more likely to affect the rest of the world than the carnage caused by the tsunami.

I'm not a heartless guy, honest. I really feel for the people over there... though I am constantly looking for updates on the nuclear reactor over there. I think I subconsciously want something terrible to happen just for the sake of having interesting to read about.

Extra points to the person who can spot the reference to computer games in this post.

RE: Who cares?
By Kurz on 3/18/2011 9:13:58 PM , Rating: 2
I honestly keep saying... its because it couldn't play 'Crysis' that Nuke Plant is having a Meltdown.

RE: Who cares?
By fearrun on 3/19/2011 12:33:27 AM , Rating: 2
Oh my god, they must of been using a dual GPU graphics card from nVidia. I heard there is a glitch under crysis the card uses up too much power causing the cooling fans to fail leading to a meltdown. The runaway overheating could generate well over 100 degrees Celsius in thermal radiation! There is no telling what kind of damage that will cause to the surrounding infrastructure.

RE: Who cares?
By delphinus100 on 3/19/2011 10:29:34 PM , Rating: 2
Look at it this way...damage to manufacturing won't help Japan's ability to borrow for reconstruction, and shortages of their electronic components* won't help manufacturing here, just as things were improving. Worst case: Could cut into hiring, could mean layoffs. No, it's not on a par with being there, but economically you can be hurt, halfway around the world.

You should care.

* I once worked for a manufacturer that had to scramble a little to find alternate sources of Hitachi integrated circuitry, when there was a boycott on their products alone, because they had sold the Soviets machinery that could allow them to produce quieter submarine propellers...

RE: Who cares?
By tng on 3/21/2011 11:15:34 AM , Rating: 2
Really, do you think that all of Japan is now running around with it's hands in the air worrying about this?

Maybe the rest of the Japan that was not subjected to the earthquake or tsunami just couldn't face the world anymore because of what happened so they did not even bother to get out of bed?

Give me a break. My parent company is in Japan and they have not missed a beat. Business as usual, as it will be for most companies there that realize that they can't faint like a goat every time nature gets nasty.

Yes there are allot of people who are dead, millions suffering and you should care about the display for your smart phone, or the IC that came from a plant in the area that was affected. Why? Well, in the future it is still where these people work, also the businesses that will help provide cleanup funds and give locals who are affected a place to meet and discus what they will do next.

Fact Check
By InfinityzeN on 3/18/2011 2:40:00 PM , Rating: 2
It was a 9.0-magnitude, not a 8.9-magnitude.

RE: Fact Check
By The Raven on 3/18/2011 3:00:58 PM , Rating: 4
It WAS a 8.9... but then they upgraded it to a 9.0 ;-)

RE: Fact Check
By fearrun on 3/19/2011 12:38:25 AM , Rating: 1
Hopefully during the quake it wasn't some jerk behind a button thinking a round number would be better to look at.

"Oh, 8.9 doesn't look right, better upgrade it to a 9.0, might sell better too."

I want the one with more GB's.

Hits Home
By The Raven on 3/18/2011 3:17:27 PM , Rating: 2
Yeah I import chemicals from Japan and we are hurting a bit. Though at this point it is mostly port congestion that is holding things up. But we are still not sure of the extent of the effects at this time (from the 9.0 directly, aftershocks, tsunami, or nuclear situation).

I don't know if you have heard but there was a Toshiba/SanDisk plant in Yokkaichi that was affected (apparently by another quake down in the Nagoya area).
As a joint venture of Toshiba and SanDisk, the Yokkaichi NAND Flash plants (Fab3 and Fab4) were located 500 miles away from the epicenter and were hit with a mild earthquake with a magnitude of 2 to 3. There were no major damages on the facilities and equipments and after a temporarily inspection, production was back to normal last Friday. However, some wafers were reported destroyed from the earthquake, we estimated the damage may reduce below 10% of the total Toshiba/SanDisk output in 1H2Q11. In short, given no additional supply increase from other NAND Flash suppliers, the earthquake may reduce the global NAND Flash bit supply by less than 4% in 2Q11.

I bring that up because one of my suppliers has a plant in the same city and the thing has been shut down. We are currently on the day to day with status updates though I haven't gotten a clear assessment of the situation yet.

RE: Hits Home
By sviola on 3/18/2011 4:32:21 PM , Rating: 2
That's really bad. But the situation could get a bit worse if Japan is forced to bring back money from their investments around the world to rebuild the country (just in Brazil that would mean 80+ billion dollars, which would have big impact in the economy - it's near 4% of the countries GDP and this is only related to investments made bby persons. Corporate and government investment may be higher - and it may have bigger inpacts in the US).

RE: Hits Home
By The Raven on 3/18/2011 5:50:47 PM , Rating: 2
Totally. That is kind of what I was trying to convey. I mean in all ways that you could be affected by these events... We just don't know what is going to happen since we don't even have all the facts on the ground collected yet. Especially when the "aftershocks" (or are they just separate earthquakes?) are still going off and we have an unstable nuclear situation.

We just don't know how bad it is or will be at this point.

Supplies from Japan
By tng on 3/18/2011 3:29:07 PM , Rating: 2
I work for a company here in the US that is a owned by a Japanese company.

Before the earthquake, we had ordered 2 pieces of custom equipment for customers here in the US. Normally this equipment would have taken 6 to 7 months to build and ship.

Our parent company in Japan is very far South of the earthquake area and did not even feel the quake and did not see hardly any effects of the tsunami. Since parts of the equipment that we ordered come from different areas of Japan we are still waiting to see if there will be delays or not.

As of now there is one specialty part that is machined by a company in the North. Evidently no one there has answered the phone all week and we don't know the status yet. Needless to say if we get the rest of the equipment built, and are missing this part, it will be like having a brand new car that has no wheels on it, everything works, just can't drive it.

The whole event has also killed the already bad Dollar/Yen value. It seems what our last two presidents and their bailouts couldn't do, the earthquake has, driven the Dollar to even lower value.

RE: Supplies from Japan
By The Raven on 3/18/2011 6:20:19 PM , Rating: 2
The whole event has also killed the already bad Dollar/Yen value. It seems what our last two presidents and their bailouts couldn't do, the earthquake has, driven the Dollar to even lower value.

Well we used up all the safety nets during the recession. But, it looks like that imbalance of the JPY/USD was a blip. Holy cow I am glad about that, since my job is 100% import sales. But even still it doesn't look good for my crew here even if the dollar slowly devalues against the JPY.
As of now there is one specialty part that is machined by a company in the North. Evidently no one there has answered the phone all week and we don't know the status yet.

Wow. Luckily it is not that bad for our suppliers. We have one company that has a plant just to the west of the Fukushima plant (just outside of the US evacuation area) but they are doing some sort of temporary migration to one of their other plants in the Nagoya area, but they are a very big company with capacity (and many plants) to do that. Heaven help those who who are smaller.

RE: Supplies from Japan
By tng on 3/21/2011 1:29:01 PM , Rating: 2
Love the Nagoya area. Don't know but that area was probably not that hard hit by the quake.

It does surprise me some that companies like Toyota with most of their fabrication in place in the Nagoya area are having parts supply issues, you would think that they would be less likely to have problems.

Sucks for Japan, but....
By ajoyner777 on 3/21/2011 3:21:30 AM , Rating: 2
Maybe the U.S. should use this opportunity to start making it's own LCD's, and quit relying on other countries so much. We should never be in a position where the economy/production of another country affects our own.

RE: Sucks for Japan, but....
By tng on 3/21/2011 11:26:21 AM , Rating: 2
As a person who deals primarily in Semiconductor and LCD fabrication equipment, it really is not that easy.

Setting up a LCD fab is not a cheap venture. Just an estimate of a Gen 8 fab built here in the US, in a area that would look favorably upon such ventures would be upwards of 10 billion dollars. Also there is the fact that all of the equipment that makes the TFT panels themselves is built in Japan.

And in other news
By ShaolinSoccer on 3/19/2011 11:21:04 PM , Rating: 1
HP today announced that it has entered into a joint development agreement with Hynix Semiconductor Inc., a world-leading memory supplier, to bring memristor, a new circuit element first intentionally demonstrated in HP Labs, to market in future memory products.


•The two companies will jointly develop new materials and process integration technology to transfer the memristor technology from research to commercial development in the form of Resistive Random Access Memory (ReRAM). Hynix will implement the memristor technology in its research and development fab.
•ReRAM is non-volatile memory with low power consumption that holds the potential to replace Flash memory currently used in mobile phones and MP3 players. It also has the potential to serve as a universal storage medium – that is, memory that can behave as Flash, DRAM or even a hard drive.

"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch

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