TOKYO -- Following the devastating earthquake, tsunami and electrical power crisis that severely impaired both the Japan and world semiconductor industry, many supply chain players now report that production has reached pre-earthquake levels with minimal risk to future shipments.

In addition, the Japanese government has excluded semiconductor fabs and many chemical plants from the 15% power cuts planned for this summer.

Damaged facilities have been repaired, electrical power supply interruptions that hindered chemical plants and fabs have been eliminated, and increased production from non-Japanese production facilities have significantly reduced the risk of further earthquake-related supply chain shortages. Many plants, including the Mitsubishi Gas Chemical electronic materials production subsidiary that manufactures the BT resin used in the majority of semiconductor packaging, has now recovered to the same level as normal operation before the earthquake.

“The semiconductor industry has proven once again to be resourceful, resilient and global,” said Jonathan Davis, President of the semiconductor business unit at SEMI, the global supply chain association. “With the announcement by Japan’s Ministry of Economy, Trade and Industry of the new power conservation plan, SEMI is confident the semiconductor IC, equipment and materials industry will experience moderate to strong growth in 2011.”

While the semiconductor industry is diverse and global, the immediate impact of the Tohuku earthquake on March 11 on the world semiconductor and electronics industry cannot be underestimated. Japan represents approximately 7.5% of worldwide GDP and contributes about 23% of the world’s semiconductor capacity. Japanese semiconductor material suppliers comprise approximately 55% to 60% of the total market, and Japanese companies produce about 35% of the world’s semiconductor manufacturing equipment by revenue. The vast majority of Japan’s semiconductor and electronics supply chain resources, however, were not directly impacted by the earthquake and tsunami. Disruptions caused by the power plant closures were responsible for the overwhelming majority of supply chain disruptions, particularly chemical processing and semiconductors fabs that require secure, stable and continuous power. Through country-wide energy conservation and other measures, Japan power shortages have been substantially eliminated.

SEMI has compiled a comprehensive list of links providing information on the production status of many important semiconductor and electronics supply chain companies. From this list of over 80 companies, a majority now report production has returned to normal and near-normal operations.  Some of the important recent supplier announcements include:

• Shin-Etsu Handotai produce an estimated 20% of the world’s raw 300mm wafers are produced at the companies Shirakawa plant and MEMC, another leading producer of wafers, were both significantly impacted by the earthquake and power disruptions.  Today, both companies report that wafer production is nearing pre-earthquake levels, with other facilities making up the gap.
• Toshiba, the world’s No. 2 maker of flash-memory chips, has shown “surprising resilience” according to Business Week, with the company’s rising 15% since Mar. 18. On May 10, Toshiba announced that profits for the year would climb to a record 140 billion yen ($1.7 billion). The company also announced capital spending plans of 1.45 trillion yen ($17.7 billion), up from the previously announced 1.3 trillion yen.
• World semiconductor and electronics manufacturers including TSMC, Intel, Apple and Samsung all have reported minimal if any disruption to their supply chains or production following the Tohuku earthquake. In the supply chain, SEMI is currently forecasting that new equipment revenues will grow 16% this year to reach $45.81 billion, and 6% growth for materials totaling $47.72 billion.

While many semiconductor-related operations report being at or near pre-earthquake production levels, many sites report ongoing challenges, and the country remains concerned about nuclear radiation. The damaged nuclear plant continues to leak radioactivity and authorities will be pumping water into the damaged reactors and venting radioactive steam for a year or more. Last week, a new leak in a storage container had dumped an additional 60 tons of radioactive water into the environment. Renesas reported that its shipments won't return to pre-earthquake levels until the end of October, possibly causing microcontroller shortages in the automotive industry.

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