The continuing natural disaster in Japan has severely hindered the manufacture of basic components used in everything from computers to smart phones, increasing the likelihood that some of the world's biggest technology companies will face product shortages and delays.
"You will see shortages of everything from screens to memory, and with it, an increase in prices," said Roger Entner, an analyst with Recon Analytics in Boston.
Japan is the world's biggest supplier of silicon used to make semiconductor chips, according to research firm IHS iSuppli.
"The Japan earthquake and tsunami could result in significant shortages of certain electronic components, potentially causing pricing for these devices to increase dramatically," iSuppli said. Because most semiconductor producers keep about two weeks' worth of inventory on hand, the firm added, the market likely won't feel a pinch until the end of the month.
"Before the disaster, semiconductor inventories in the global semiconductor supply chain were at high levels. The Japanese earthquake will cause the appearance of shortages to be delayed by a matter of weeks."
Much of the disruption is a result of shipping and logistics issues, rather than damage to Japanese manufacturing sites. According to iSuppli, many companies will have problems getting material and employees in and out of their factories. In addition, some companies are shutting down production at some facilities voluntarily, in order to reduce the pressure on Japan's battered power grid.
Japan is a vital hub in the manufacture of components necessary to make technology such as flash memory and dynamic random access memory, which are key parts of most computing devices. Flash memory, specifically, has become increasingly popular in recent years, due in large part to a surge in the production of mobile devices such as tablet computers.
Some of the world's biggest technology manufacturers have announced temporary plant shutdowns. Sony Corp. has suspended operations in at least seven Japanese plants. In addition, the company is assessing damage at several other facilities, while other Sony plants have voluntarily suspended operations to help contain power outages. The suspended operations will have an impact on the production of everything from lithium ion batteries to DVDs to semiconductor lasers.
The various delays and interruptions will likely affect almost every corner of the consumer electronics industry. Electronics giant Hitachi Ltd. , for instance, confirmed damage at six of its facilities. According to iSuppli, Hitachi supplies displays for the Nintendo DS hand-held video game system and for LG phones. FujiFilm also announced temporary disruptions to its operations, likely to affect some shipments of digital cameras. Even though the Toshiba Corp. factories that produce memory chips were largely unaffected by the earthquake, the company could still see a drop in shipments because of infrastructure damage in Japan.
In all, the disruptions in Japan's technology industry could have an effect on everything from the film industry to car stereos.
The unfolding tragedy's massive impact on industry is especially difficult for the country's electronics industry because of the precision required to build some technology. Intricate and highly technical components require a rigorous, secure production cycle involving clean rooms free from dust and other impurities. Unlike cars, for example, whose production cycle can be stopped and started, a power failure in the middle of manufacturing chips can ruin an entire shipment, Mr. Entner said.
"Japan will not have enough power to keep all its factories running non-stop and a lot of these manufacturing processes have to run 24/7 - so that's a major problem," he said. "It's inconvenient to Toyota and Nissan, but it's absolutely devastating to electronics manufacturers."Report Typo/Error
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