Japan Quake ‘Most Significant’ Supply Chain Disruption Ever: IHS

Thursday, April 7, 2011
By Paul Martin


NEW YORK (Dow Jones)–As far as disasters go, the situation in Japan is having “the most significant supply chain impact the [consumer electronics] industry has ever experienced,” a technology research firm said Friday.

While other disasters have hurt the electronics supply chain, none had “as broad an impact on as many points in the supply chain as this disaster in Japan,” said Dale Ford, IHS iSuppli senior vice president of market intelligence, speaking during a webcast about the troubles in Japan.

The magnitude-9 earthquake and resulting tsunami, as well as the ensuing nuclear crisis in Japan, have highlighted the global dominance held by many of that country’s makers of electronic components, and raised concerns that disruptions to their production could cause shortages and price spikes for products such as memory chips and liquid-crystal-display panels.

Along with plant damages, the main issue in Japan remains power outages, which prevent factories from becoming fully operational, IHS iSuppli analysts said. They expect most factories to be back to full production in two to three months, though some may take as long as six months or never be used again.

While there have been worries about the supply of BT resin, a substance used to make printed circuit boards, the current disruption in resin manufacturing should have minimal impact on the industry, said Len Jelinek, IHS iSuppli analyst for semiconductor manufacturing.

He said the latest material concern is hydrogen peroxide, which is used as a cleaning agent. About 75% of the supply comes from Japan. “This is rapidly turning into a very concerning issue in Japan,” Jelinek said.

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