Japan disaster impact 'less than feared'

28 June 2011

28 June 2011 | Adam Leach

Japan’s earthquake and tsunami brought disruption to the electronics industry’s supply chain, but its effect was “less than feared”, according to research.

Data gathered by Gartner found the semiconductor sector is expected to grow by 5.1 per cent in 2011, generating $315 billion global revenue (£197 billion). This is much higher than the 4.6 per cent prediction amounting to $314 billion (£196 billion) that was previously forecast for the year by Gartner.  

The research finds the industry has minimised the risk to its supply chain, despite fears raised in the wake of the Japan disaster over the supplies of silicon wafers, batteries and a variety of other components used in the electronics sector.

Peter Middleton, principal research analyst at Gartner, said: “The disaster in Japan clearly had an impact on the semiconductor market and supply chain behaviour, but it is less than initially feared.”

Japan is the world’s largest supplier of silicon used to make semiconductor chips – 60 per cent of the global total. Semiconductor parts include flash memory chips used in USB drives and MP3 players, dynamic random-access memory (DRAM), small computers called microcontrollers and liquid-crystal display parts, including panels used in televisions and computer screens.

Middleton said: “In the last two weeks of March, vendors stepped up efforts to secure supply in the face of uncertainty and potential shortfalls, leading to some double ordering that continued into the second quarter.”

He admitted there may still be a few surprises in store as a result of problems in Japan, but expects production will start to start to normalise in the third quarter with order numbers returning to pre-tsunami levels.

Procurement professionals recently discussed how supply chain risks caused by natural disasters can be overcome. During the CPO Agenda Question Time debate in London last week (23 June), Nick Wildgoose of Zurich Financial Services urged purchasers to check whether any of their supply operations were located in earthquake or flood zones by asking insurers.

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