Japan disaster impacts on chip supply

Global supplies of silicon chips are dwindling in the wake of the Japanese quake and tsunami.

Three weeks after the disaster struck, many of Japan's major producers are still struggling to keep up with demand as existing inventory runs short.

Companies like Hitachi and Toshiba have been affected by the series of disasters not only by damage to infrastructure caused by the initial quake and tsunami, but by restrictions on movement caused by the ongoing meltdown at the Fukushima nuclear plant.

According to the International Business Times, companies like Apple are now turning their eyes to Taiwan to make up the shortfall in supply and has resigned itself to paying a 400 per cent premium on some components in order to keep up with demand for gadgets like the recently-released iPad 2.

Digitimes reported yesterday that Apple would absorb the additional costs rather than passing them on to retailers and consumers, a move which could leave companies with less impressive cash reserves struggling to turn a profit on severely reduced margins.

Lenovo, which started shipping its own iPad-alike, the LePad in China on Monday, has also warned that short supply of components could delay the device's wider launch.

Hitachi has set up an emergency headquarters in response to the earthquake damage to not only help affected employees and other locals, but to set up specialised teams to execute production recovery plans at damaged manufacturing bases 'as quickly as possible'.

In a statement the company said, "Hitachi Group will maximise the efficiency of support and recovery operations, and will combine the capabilities of the entire Group to contribute to the fastest possible recovery in regions affected by the disaster."

Hitachi also says that over 1,000 of its staff members are providing support and assistance to the teams currently trying to avert a nuclear disaster at the Fukushima Daiichi plant and that a team of 300 of its engineers are involved in the effort to restore the plant's power supply.

Hitachi says that all finished products which were delayed by the earthquake and its after-effects have now been shipped and that production operations were partly resumed on March 25th. Domestic and overseas shipments of post-quake products have already begun but Hitachi did not offer details of how badly potential capacities had been depleted.

Currently, three major bases, including the Hitachi Display Works in Mobara, are still under recovery. Another ten bases, including the Omika Information and Control Systems Works and the Disk Array and Information & Telecommunications plants in Kanagawa have full or partial operation.

Hitachi's Maxell Osaka Works is currently manufacturing dry cell batteries at full capacity, to provide much-needed emergency power supplies to affected regions.

Toshiba says that its semiconductor businesses in Yokkaichi and Oita are now running normally, despite sustaining minor damage.

The Iwate chip plant started to ramp up production a few days ago but Toshiba says is has been using alternative production facilities at its Oita, Himeji and Kaga plants in order to reduce the impact on customers.

The company's Mobile Display plant, which makes small and mid-sized LCD displays in Fukaya City, is still a month away from full recovery but some production has been moved to the Ishikawa Works.

An official statement from the company reads, "Toshiba continues to promote detailed investigations of the status of suppliers in order to determine the extent of the impact on production. Every effort is being made to secure materials and parts and to minimise impacts on production

"Toshiba is investigating available stock, including channel inventory, parts and half-finished goods; negotiating with suppliers to switch production to locations outside the affected region; and promoting adoption of substitutes. Toshiba Group will also support the earliest recovery at suppliers with damaged manufacturing facilities by supplying necessary equipment and components."

Rolling power outages are also causing some difficulties but the company says it is reducing power consumption at some of its offices and production plants, and using in-house generation systems to minimise the impact, and that production outside of the outages are "basically operating as normal."