Analysts: Japan Disaster Worst Supply Chain Impact Ever

Written BY: Sharise Cruz

The natural disaster in Japan has caused disruption and shortages worldwide, and now, technology research firm IHS iSuppli has determined that the situation is “the most significant supply chain impact the [consumer electronics] industry has ever experienced.”

Analysts for IHS iSuppli determined that physical plant damage and rolling power outages caused by the wake of the magnitude-9 earthquake and tsunami have been the most significant road blocks to supply chain rehabilitation in Japan. In a webcast, IHS iSuppli Research Director Dale Ford said it will take up to two or three months for most factories to return to full production levels. According to Ford, some factories will not be fully operable for six months and others may be too damaged to ever recover.

The latest supply chain victims of the disaster are hydrogen peroxide and the silicon wafers used to produce computer chips.

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Japan accounts for 75 percent of the world’s hydrogen peroxide manufacturing. Nippon Peroxide, Adeka Fuji and Mitsubishi Gas and Chemical have stopped production of the material, widely used as a cleaning agent.

The country produces 60 percent of the world’s supply of silicon wafers, and the disruption in assembly could cause a shortage of about 200,000 wafers per month for two to three months.

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“That is a critical situation. This is rapidly turning into a very concerning issue in Japan,” said Len Jelinek, IHS iSuppli Analyst for semiconductor manufacturing. “The suspension of operations at these plants could have wide-ranging implications beyond the Japanese electronics industry.”

There’s a possibility that other countries could step up to the plate and offset the shortages in Japan. Nations like South Korea could increase silicon wafer production and fill some of the gaps in the supply and demand chain.