The Japanese quake has suspended the production of silicon wafers in that country, potentially endangering the world’s supply of chips, which are used in everything electronic.
Japan’s silicon wafer manufacturers supply about 25 percent of the global capacity for the key ingredient in semiconductor chips, according to market researcher IHS iSuppli. If those producers don’t return to production soon, prices for the silicon wafers could rise and a global shortage could result.
Silicon wafers are the raw material for semiconductors. Chip makers buy the wafers and process them in multibillion-dollar factories. Then they slice the wafers into individual chips, which are then used in everything electronic from smartphones to computers. Manufacturing operations have stopped at wafer producers Shin-Etsu Chemical Co. in Shirakawa Japan; MEMC Electronic Materials also stopped production in Utsonomiya. Those two factories account for 25 percent of the global supply of chips.
The Shirakawa factory produces 300 millimeter wafers, which are the size of a medium pizza and are used in advanced chips such as flash memory and dynamic random access memory devices. As a result, iSuppli says the global supply of memory chips will be the most severely impacted segment of the chip industry. Logic devices such as microprocessors also use the 300 mm wafers.
Shin-Etsu’s Shirakawa plant alone is responsible for 20 percent of global silicon wafers. It is located in Nishigo Village and has reported damage to production facilities and equipment.
To compensate for lost production, Shin-Etsu is setting up production in other factories, but it’s unclear how long that will take. MEMC said it evacuated employees and suspended operations at its Utsunomiya factory, which accounts for 5 percent of worldwide wafer production, after the quake. MEMC said it expects shipment delays in the near term.
In another supply chain problem, two other Japanese companies said they have stopped producing a raw material used to make 70 percent of the world’s supply of printed circuit boards. The PCBs are used to mount chips and connect them together inside hardware systems. PCBs are used in everything electronic as well, from PCs to digital wristwatches.
Mitsubishi Gas Chemical and Hitachi Kasei Polymer said they expect to resume production within a couple of weeks. They make a raw material called copper-clad laminate. Inventory levels of that material are sufficient to keep electronics production lines going for the time being, as long as the interruption doesn’t last more than two weeks, iSuppli said.
In other news, Elpida Memory, a maker of DRAM chips, said its chip assembly factory in Yamagata has been damaged and a lack of electricity is impacting production. The chip’s production is now operating at less than 50 percent of capacity. Meanwhile, AKM Semiconductor said its factory for making electronic compasses, as used in the iPad 2, have not been damaged, nor has its supply chain been interrupted. The quake has also damaged about 40 percent of the production capacity of Renesas, a maker of microcontrollers and system-on-chip devices, and half the total capacity of chip production at Fujitsu has been damaged.