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Digitimes Insight: Japan quake likely to cause major disruptions to auto supply chain
Tony Huang, DIGITIMES Research, Taipei [Wednesday 23 March 2011]

The earthquake and tsunami in northeastern Japan, the area where the country's major car and parts manufacturing is, will likely cause significant disruptions to the auto industry's global supply chain.

Japan accounts for more than 30% of total car production worldwide. Earthquake-related closures at several auto and related assembly plants in Japan could have a significant impact on global car supplies.

Alps Electric, among the major car-use electronics device suppliers, has had to shut down operations at its plants in the Tohoku region due to electricity and water shortages.

The supply of automotive chips is also being affected by the earthquake and its aftermath. Semiconductors used in automotive applications, such as microcontroller units (MCU), usually require a longer period of time for validation. Besides, they are made specifically to customized requirements. Because of such specific needs, car vendors do not have many multiple sources to choose from.

Three Japan-based firms are ranked among the worldwide top-10 automotive semiconductor companies, and those have all seen their production disrupted by the recent crisis in Japan.

Renesas Electronics, Japan's largest supplier of semiconductors to the automotive sector, still has six factories which remain closed. Among the facilities, its Naka factory (Ibaraki Pref.) makes car-use MCU products. The other plant that also manufactures MCUs for automotive applications, Renesas Northern Japan Semiconductor (Aomori Pref.), is being shut down due to partial damages to buildings and power shortages.

Fujitsu also reported that damages to buildings and production equipment at its plants in Iwate, Miyagi and Fukushima prefectures. The amount of losses and effects on profits as a result of the earthquake are still unknown, according to its latest update.

JEITA: Production value of Japan's and worldwide electronics components, 2008-11 (JPY million)

Source: JEITA, compiled by Digitimes, March 2011

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