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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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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.

"This is about the Internet.  Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis

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