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
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.
quote: 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.