Technology Companies Assess Japanese Quake Impact

First Published Friday, 11th March 2011 02:21 pm - © 2011 Dow Jones


By Ruth Bender

Of Dow Jones NEWSWIRES

Technology companies Friday were assessing the impact of the Japanese earthquake on component supplies and on their local plants, staff and sub-contractors, with most saying it was too early to give more details.

The 8.9-magnitude earthquake struck northern Japan, causing deaths and damage to the northeast and panic as far south as Tokyo, with an ensuing tsunami devastating coastal areas.

Japan is a major exporter of electronic goods and chips. The total global semiconductor market alone is worth around $298 billion, with Japan contributing around 24% to that total and Taiwan 30%, according to data from U.K.-based semiconductor market research firm Future Horizons. Europe, meanwhile, accounts for only 8% of global semiconductor production, meaning the region is largely dependent on Asian imports. Japan exports half of the semiconductors it produces.

While major chip fabrication plants may not have been directly hit by the earthquake, any disruption caused by a power supply outage, for example, will mean "anything being processed at the time will definitely not be worthwhile," and will have to be discarded, said Future Horizons' Chief Executive Malcolm Penn. He said in such cases at least a day's production will be lost, and with inventory management very tight right now, that would cause "instant disruption" to supplies.

Penn noted that Japan is also a major supplier of micro-controllers to the automotive industry, which control electronic wing-mirrors, seat adjustment, engine function and anti-lock breaking systems.

Meanwhile, companies in the broader technology space were still coming to grips with the unfolding situation in Japan.

Finnish mobile phone giant Nokia Corp. (NOK1V.HE) said the commercial impact on the business in terms of direct manufacture and component supplies is still being determined. It would be "inappropriate to speculate at this time," on the detailed impact, Nokia spokesman Tomi Kuuppelomaki told Dow Jones Newswires.

Nokia's direct presence in Japan consists of only a small number of administrative staff. It has no manufacturing units there but does source components from subcontractors in the country.

Sony Ericsson, the joint mobile phone venture between Japanese Sony Corp. (SNE) and Swedish telecom firm Ericsson (ERIC), said it is closely monitoring the situation in Japan but that so far there hadn't been any reports of major damage from its suppliers.

U.K.-based telecommunications firm BT Group PLC (BT.A.LN) said it is working to get a small number of customer sites working again after they were damaged following the earthquake.

Franco-U.S. telecom equipment maker Alcatel-Lucent SA (ALU) and chip maker STMicroelectronics NV (STM) couldn't immediately comment on the situation. STMicro said it doesn't have any chip manufacturing plants in Japan.

ASML Holding NV (ASML.AE), which makes lithography systems that map out electronic circuits on silicon wafers, said it isn't affected by the earthquake.

-By Ruth Bender, Dow Jones Newswires; +33 1 4017 1740; ruth.bender@dowjones.com

(Arild Moen in Helsinki, Jens Hansegard in Stockholm, Lilly Vitorovich and Adrian Kerr in London and Archibald Preuschat in Amsterdam contributed to this article.)

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