Earthquake damage hits production of semiconductors and other electronics

Japan crisis hits electronics supplies

Electronics manufacturers have been forced to suspend normal operations in Japan after the devastating earthquake.

While leading suppliers of memory, circuits, semiconductor chips and other components say there is actually little damage to equipment and facilities, production has been affected by power cuts and problems in transport, communication and infrastructure.

Elpida, a top manufacturer of Dynamic Random Access Memory (DRAM) circuits, confirmed that while its Hiroshima plant in the southwest of Japan is operating normally and no wafers have been scrapped, its Akita plant has been forced to stop production.

The facility in the northwest of Japan has suffered from the power shut down due to the earthquake, but the global supplier stressed that there is no damage to its manufacturing equipment and that operations will resume once the electricity supply is restored.

However, the company, which provides memory solutions across applications including personal computers, servers, mobile devices and digital consumer electronics, said it is struggling to communicate with its materials suppliers and needs to continue gathering and analysing information from them to make a full assessment.

“Currently, managers and employees are working as fast as possible to carefully check operations at every level to make sure that business can proceed normally,” a company statement said.

Chipmaker Renesas has continued to suspend production at seven of its 22 factories in Japan.

Four of these, the front-end fabs in Gunma and Yamanashi and the back-end fabs in Aomori and Yamagata, are preparing to restart manufacturing procedures after the blackout measure announced by electricity companies is completed. All but the Aomori fab have suffered partial damage.

The Yamagata front-end fab had begun the process of coming back into service but has been forced to suspend this due to the blackout measure, while the front-end fabs in Aomori and Ibaraki are still not in production as they have no electricity supply.

The Aomori fab has confirmed some partial damage and will need to assess its manufacturing equipment once power is restored, while the Ibaraki fab has identified a defect and will also reassess its status once the power is back up.

Electronics manufacturers Toshiba, Texas, Canon and Sony have also been forced to suspend production at plants and factories.

Toshiba supplies about one-third of the world's NAND flash memory chips currently in demand due to their use in mobile devices and tablets such as the newly released Apple iPad2.

The Japanese company said it is still inspecting its closed System LSI factory in Iwate, which produces microprocessors and image sensors, and could not say when it would reopen.

Chipmaker Texas Instruments said its two suspended plants would take until July to return to full production, although it has redirected 60 per cent of their output to other sites.

Canon said it may not be able to resume production at three factories making office equipment and lenses used in audio-visual players this week.

Sony also said its eight factories making equipment ranging from optical devices, IC cards, blu-ray discs, chip equipment and lithium batteries remained closed, with no guarantees on resuming date.

Hynix Semiconductor, the world's second biggest memory chipmaker, said it had around two months of wafer inventory but a prolonged disruption in supplies of wafers by major producers such as Shin-Etsu may interrupt its production schedule.

Shin-Etsu has restarted one factory near Tokyo, but two plants near the worst-hit areas remained closed and the company was unable to say when production will resume at the sites. It is trying to boost production elsewhere to make up the shortfall caused by the shutdown.

"Since we have enough inventory, there'll be no short-term impact but as the situation gets worse and prolonged, it could have a wide-ranging impact to the overall industry because Japan is a major wafer supplier." said a spokesman from Hynix.

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