It may be weeks before the full impact of the Japanese quake and resulting tsunamis is on the flow if ICT between the disaster-affected country and Australia is known, IDC has warned.
According to the analyst firm’s senior infrastructure analyst, Trevor Clarke, the supply of completed products, parts and components from Japan will likely be affected.
Meanwhile, prices of widely used chips, including NAND flash memory and DRAM, have both risen sharply since the 9.0-magnitude earthquake struck and hurled tsunami waves at the northeastern part of Japan. Prices of both DRAM and NAND Flash memory have been falling just before the earthquake struck.
But major Japanese suppliers have said factories producing these chips were largely unaffected by the temblor, nor are they in areas where blackouts will force production to stop. While it appears by their statements that the memory markets are overreacting to the earthquake, analysts say that the price increases may highlight a graver issue for the global chip industry: damage to Japanese component and material suppliers vital to chip production.
“There are some Japanese vendors which may have interruptions to their supply chains, especially Sony and potentially Toshiba, which have factories in the disaster-affected region,” Clarke said.
“Japan is a big supplier of memory — NAND and DRAM are the big ones — so the disaster could have an impact [on supply].
“That said, most of these Japanese organisations are prepared for emergency situations and they have systems, policies and people in place to get back on track pretty quickly.”
Clarke said that while there were a number of major global data centres in the Yokohama and Tokyo regions, Japanese building codes factoring in the possibility of earthquakes would likely mean any interruptions to service were relatively short lived.
“A lot of Japanese companies have survived earthquakes over the years and I suspect a lot of the data centres are operating well and getting back to normal,” he said.
“The challenge will be energy supply [due to] rolling blackouts, but they will have generators in place and there will be energy prioritisation to critical systems as they can’t afford for the economy to fall down.
“So you will see larger companies continue to have a flow of electricity to their data centres and operations.”
Early reports have indicated that undersea telecommunications cables in and out of Japan appeared to have mostly survived the devastating earthquake.
In related news, Australian ambassador, Murray McLean, has said hundreds of emails from Australians caught up in Japan’s earthquake have been sent to the embassy there.
As of Monday morning, Australia’s embassy in Japan had received about 500 emails from “people who are sending in their particulars or asking particular questions”.
Will iPads and iPhones be affected?
The price of NAND flash memory, which has grown in importance as the main data storage in iPads, iPhones and other mobile devices, has increased by as much as 20 per cent since the earthquake struck as companies try to figure out if chip factories in the area were damaged.
Although prices rose, not many people were selling, according to DRAMeXchange, which runs an online clearinghouse for NAND, DRAM and other chips. Most companies seemed more interested in keeping their supplies of the chips instead of taking a quick profit.
The NAND market has reacted so strongly because Japan supplies as much as 40 per cent of the world’s NAND flash chips, according to Jim Handy , at Objective Analysis.
Toshiba, one of the biggest NAND suppliers in the world, said none of its NAND flash memory factories were hurt by the earthquake or tsunami.
The company’s only chip factory in the area of the earthquake is in Kitakami City, Iwate prefecture, and produces logic chips, not memory chips. Production at the factory stopped as soon as the earthquake hit and it remains out of operation, Toshiba said.
The chip factories where Toshiba makes NAND flash memory are in Yokkaichi City, Japan, around 500 miles away from the earthquake’s epicentre and the area hit by the tsunami.
“Two (factories) temporarily stopped operations on March 11, Japan time, but afterward resumed operation and are now operating normally,” Toshiba said. “We are still carefully examining any possible impact on the production equipment caused by the earthquake but the effect so far is minimal.”
Prices of DRAM, the most widely made memory chips used in PCs, laptops and servers, surged 7 per cent after the earthquake was reported, according to market researcher iSuppli, and then settled down.
Elpida Memory, Japan’s only major DRAM maker, has said its DRAM factories weren’t affected by the earthquake. The company’s main chip factory is in Hiroshima, in the southwest of Japan, well over 500 miles away from the earthquake.
While Japanese factories producing NAND and DRAM appear to have made it through the earthquake relatively unscathed, some of the world’s largest suppliers of key materials used in chip production, such as the silicon wafers that chips are etched onto, have had to halt production.
Sumco Corporation and Shin-Etsu Chemical, which supply most of the world’s silicon wafers, both ceased production at factories near where tsunamis swept entire towns into the sea and damaged the cooling systems of one of Japan’s nuclear power plants.
Sumco said its factory in Yonezawa was shut after the earthquake. No employees were hurt, and after it does a safety check it hopes to get the factory running again.
Shin-Etsu said three of its factories, one each in Annaka, Kamisu, and Nishigo Village, all stopped after the earthquake.
Production equipment at two of the factories, in Kamisu and Nishigo Village, was damaged, but “at present it is still unclear how long it will take to restore such damaged equipment and facilities at both plants,” the company said in a statement Tuesday.
Sumco holds a 35 per cent share of the 300-millimeter (12-inch) silicon wafer market, while Shin-Etsu holds 30 per cent, according to Credit Suisse. Japanese companies supply 72 per cent of the world’s silicon wafers overall, the investment bank added.
Rolling blackouts
The companies also expect power outages in the area to hurt production.
Aside from the nuclear plants, thermal and hydro power plants were also shut down after the earthquake, according to Tokyo Electric Power Co., and it is working to restore power. Nearly a third of its capacity was knocked offline by the earthquake.
The power company started rolling blackouts on Monday, affecting people and companies in northeastern Japan.
Global chip giants including Taiwan Semiconductor (TSMC) and South Korea’s Samsung Electronics have said they don’t expect any near-term impact from the silicon wafer problem. Chip makers always hold some inventory of wafers and can rely on distributors as well.
But should the current situation continue over the longer term there could be problems.
“Our checks indicate foundries, raw wafer suppliers and distributors have inventory of 1-2 months, so would be impacted if the delay extends out,” Credit Suisse said.
The companies also expect power outages in the area to hurt production.
Aside from the nuclear plants, thermal and hydro power plants were also shut down after the earthquake, according to Tokyo Electric Power Co., and it is working to restore power. Nearly a third of its capacity was knocked offline by the earthquake.
The power company started rolling blackouts on Monday, affecting people and companies in northeastern Japan.
Global chip giants including Taiwan Semiconductor (TSMC) and South Korea’s Samsung Electronics have said they don’t expect any near-term impact from the silicon wafer problem. Chip makers always hold some inventory of wafers and can rely on distributors as well.
But should the current situation continue over the longer term there could be problems.
“Our checks indicate foundries, raw wafer suppliers and distributors have inventory of 1-2 months, so would be impacted if the delay extends out,” Credit Suisse said.
Follow Tim Lohman on Twitter: @TLohman
