Japan Earthquake Devastates Global Chip Production

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Japan Earthquake Devastates Global Chip Production

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The Japanese earthquake, tsunami, and nuclear reactor problems have had a devastating effect not just on people's live and property, but also the Japanese semiconductor industry which accounts for 25% of the global supply of silicon wafer. This will affect pricing on everything from PCs to smartphones to gadgets. Not good. Check out the news with additional information after the jump... Japan Earthquake Suspends Supply of Raw Material Used in 25 Percent of Global Chip Production—Memory Segment Hit Hard

The Japanese earthquake has resulted in the suspension of one-quarter of the global production of silicon wafers used to make semiconductors. Manufacturing operations have stopped at Shin-Etsu Chemical Co. Ltd.’s Shirakawa facility. MEMC Electronic Materials Inc. also stopped manufacturing at its Utsunomiya plant. Together, these two facilities account for 25 percent of the global supply of silicon wafer used to make semiconductors. Wafers are thin slices of silicon that serve as the substrate of semiconductor devices. All semiconductors are built on wafers.

The facility in question Shirakawa facility produces large 300mm wafers, which are used in more advanced semiconductors that have high transistor counts. The wafers made by this facility mainly are used in the manufacturing of memory devices, such as flash memory and DRAM. Because of this, the global supply of memory semiconductors will be impacted the most severely of any segment of the chip industry by the production stoppage. Logic devices represent the next largest use of these wafers.

These companies supply not only domestic Japanese demand for wafers but also semiconductor manufacturers around the world. Because of this, the suspension of operations at these plants could have wide-ranging implications beyond the Japanese electronics industry. A 25 percent reduction in supply could have a major effect on worldwide semiconductor production.

Shin-Etsu’s Shirakawa plant is responsible for 20 percent of global silicon semiconductor wafer supply. The plant is located in Nishigo Village, Fukushima Prefecture Shin-Etsu reported that there has been damage to the plant’s production facilities and equipment. To compensate for the lost manufacturing, Shin-Etsu said it would set up production systems at other facilities. However, the company warned it was unclear how long it would take to restore the damaged facilities and equipment.

MEMC said it evacuated employees and suspended operations at its Utsunomiya plant after the earthquake. The Utsunomiya facility accounts for 5 percent of worldwide semiconductor wafer supply. MEMC said it expects that shipments from this facility will be delayed during the near term. 

In another development for the global electronics supply chain, two Japanese companies announced they have stropped production that amounts to 70 percent of the worldwide supply of the main raw material used to make printed circuit boards (PCBs). PCBs are used in all electronic products, from PCs to smart phones, to digital wristwatches.

The companies, Mitsubishi Gas Chemical Company Inc. and Hitachi Kasei Polymer Co. Ltd., said they will resume production within two weeks of the raw material called copper-clad laminate (CCL).

However, with current inventory levels, IHS iSuppli believes that there likely is sufficient supply of finished PCBs and raw CCL material to keep electronics production lines running at global electronics manufacturers, as long as the interruption doesn’t last significantly longer than two weeks.

Elpida Memory Inc. said its semiconductor assembly facility in Yamagata has been damaged. The company also said a lack of electricity is impacting production. The Yamagata facility’s utilization rate now is at less than 50 percent.

Confirming what IHS iSuppli noted in a previous release, AKM Semiconductor said its fab producing electronics compasses for the iPad 2 has not been damaged. The main fab for the production of the compass is located in Nobeoka, on the South island of Japan and did not suffer any power cut either.

IHS iSuppli had warned the company’s delivery of products potentially could be affected by the same logistical and power supply issues impacting all Japanese industries. AKM has noted that it already uses multiple fabs including one external source for the fabrication of its compass. Also the compass is fabricated using standard CMOS process and the production can easily be transferred to any CMOS foundry in the world.  The company said this should enable AKM to overcome logistical hurdles that may arise. 

The earthquake has damaged about 40 percent of the total wafer capacity of Renesas Electronics Corp. The company has stopped production at its Tsugaru fabs producing analog and discrete devices, at its Naka facility making system-on-chip and microcontroller devices, and at its Takasaki and Kofu fabs making analog and discrete parts.

Half of the total wafer capacity at Fujitsu has been damaged. While the company’s fabs and wafer equipment are intact, the shortage of electricity, gas and wafers means it will take three or four weeks for the company to recovery production.



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