Taipei, Thursday, January 29, 2015 01:11 (GMT+8)
light rain
Digitimes Insight: Japan earthquake to affect several major IT industries of Korea
Betty Shyu, DIGITIMES Research, Taipei [Wednesday 23 March 2011]

The earthquake in Japan will bring a significant impact on South Korea, which heavily depends on Japan for the supply of many components and materials.

On the upstream supply side, Digitimes Research believes that Korea's IC industry will see the most impact from the earthquake as most of Korea's small enterprises develop their products basing on Japanese component specifications. If related components have any supply issues, these Korea players may need to redesign their products, which could take more than 1-2 years. Optical film supply from Japan is also seeing shortages caused by the earthquake.

Japan-based Kobe Steel and Furukawa Denko, which together dominate the supply of aluminum substrates for hard disk drives (HDDs), have been both hit by the earthquake, as the two makers' capacities are all located in the disaster zones. The shortage is expected to significantly affect the HDD market, particularly the desktop PC segment.

Samsung accounts for about 10% of the global HDD market. Any issues with supply of components or raw materials from Japan will still significantly damage Samsung's HDD business. Aluminum substrates for HDD may see shortages. If the component sees tight supply, Samsung's HDD business is likely to be affected.

Furukawa Denko, which supplies 40% of the global aluminum substrates for HDD, reportedly has resumed its production. But whether supply will return to normal levels remains to be seen.

In the LCD panel industry, supply of anisotropic conductive film (ACF), which is used for bonding driver ICs to LCD panels, is 90% controlled by Japan-based Hitachi Chemical and Sony Chemicals. Hitachi Chemical's Shimodate plants and Sony Chemicals' Kanuma plants have been both shut down because of power outages. LCD panel makers Samsung Electronics, LG Display, AU Optronics (AUO), Chimei Innolux (CMI) and Sharp - each of which sees more than 40% of their ACF supply from Hitachi Chemical - may be seriously affected if the power issue prolongs.

Fujifilm's plant in Kanagawa, Japan, which mainly makes tri-acetyl cellulose (TAC) films for polarizers, experienced a level 5 earthquake on March 11. But the company has already expanded its capacity at the plants in Kumamoto, Japan. The second largest Japan-based supplier Konica Minolta also has just completed the new plants in Kobe, Japan. Therefore overall TAC supply is unlikely to be affected significantly. Korea currently imports about 80% of their TAC films Japan.

Of the glass substrate makers, Japan-based Asahi Glass' (AGC) plant in Yamagata experienced a level-5 tremor. But the plant was not shut down after the earthquake. As for LCD steppers, Nikon and Canon both have plants located in the affected areas.

Stepper makers Canon and Nikon have been much affected by the quake. Nikon currently has about 50-60% share in the global stepper market, and Canon has 40-50%.

Nikon Precision's plants in Miyagi and Tochigi make semiconductor and LCD steppers and both plants have been shut down. The plants in Miyagi mainly make LCD steppers for smartphone-use small-to-medium size panels, while the Tochigi plants produce steppers for large-size LCD panels. Canon has also shut down its stepper plants in Japan.

Although Korea has been working to raise the self-sufficiency of TFT LCD equipment, the proportion of locally-made PECVD, sputtering machines and steppers is still rather low.

Samsung and LG Display both have plans to establish new LCD lines in China. Previous issues concerning approvals by the the China government had forced the two players to delay the start of their construction to 2012 and 2013, respectively. The earthquake's impact on stepper production may further delay their plans.

In the semiconductor industry, the largest silicon wafer supplier worldwide is Japan-based Shin-Etsu Handotai, a subsidiary of Shin-Etsu Chemical. The company's monthly capacity in 2010 was 1.2 million 12-inch wafers, accounting for 33% of the worldwide capacity. The second largest worldwide supplier is Japan-based Sumco, which is a joint venture established by Mitsubishi and Sumitomo Metal Industries, and can produce 1.05 million 12-inch wafers each month, accounting for 29% of the worldwide capacity. Since the earthquake has shut down Shin-Etsu's plants in Shirakawa, Japan, global silicon wafer market has see disruption to 22% of its capacity.

Japan's DRAM and NAND flash makers were neither directly affected by the earthquake nor the rolling power cuts. They only saw temporary power outage at the time of the quake that resulted in some scrapped wafers. Korea-based Samsung and Hynix, which currently purchase 50-60% of their wafers from Japan-based Shin-Etsu Handotai and Sumco, are likely to be affected by the earthquake. Therefore Samsung is working aggressively to certify wafers from a new supplier, LG Siltron.

South Korea has been eager to develop its upstream components, raw materials and equipment. But It still relies heavily on the upstream supplies from Japan. Korea purchased US$38.1 billion worth of components and materials from Japan in 2010.

Among the components and raw materials that Korea purchase from Japan, system-on-chips (SoCs) are one of the major products. The SoCs are mainly used in IT products such as controllers or set-top boxes (STBs). Suspended production and transportation problems in Japan may affect downstream Korea IT players' production.

Small-to-medium enterprises in Korea, which consume a high proportion of SoCs from Japan, will face a more severe impact than large enterprises. A certain Korea-based STB maker, which depends on Renesas Electronics' SoC supply, dispatched personnel Japan on March 16 to seek stable supply from Japan maker. Renesas' 6-inch fab in Aomori in Japan has been shut down. The Korea company noted that the worst-case scenario would be that it would not be able to receive stable supply and have to develop completely new models.

As for battery component supply, Korea is already capable of producing about 90% of its electrolytes in house. But the country still needs to purchase about 50% of their anode materials from Japan and the rest from China. It also relies heavily on Japan for isolation membranes.

Hitachi Chemical, the largest anode material supplier in Japan and has 50% of the global market with annual capacity of 8,000 tons, did not see significant impact from the earthquake. As anode material production is not sensitive to environment changes, Hitachi Chemical is expected to resume its production within a month.

Samsung SDI, whose secondary battery cell sales are comparable to those of Japan-based Sanyo, has pointed out that its Japanese upstream suppliers are mostly located in southern and western Japan and therefore are not seeing much impact from the quake. LG, the world's third-largest rechargeable battery cell supply, noted that some of its upstream suppliers had to shut down production temporarily, but their operation have all resumed.

But it is the battery pack's upstream IC designers in Japan that have been more significantly affected by the earthquake. Battery pack shipments are expected to be delayed, which will in turn affect battery cell shipments.

As for ODD, Sony's plants for producing pick-up head and Blu-ray players in Japan have been affected by the earthquake, but since Blu-ray products still account for a rather low shipment proportion, the impact will be limited.

Japan earthquake's impact on major Korea IT industries


2010 global market share


LCD panel


May be affected by component shortages from Japan



Samsung and Hynix purchase 50-60% of their wafers from Japan-based Shin-Etsu Handotai and Sumco and their shipments could be affected.

NAND flash


Secondary battery cell


Designers of battery pack ICs have shut down operations due to the earthquake; will have impact on battery shipments.



Sony's plants for producing pick-up head and Blu-ray players in Japan affected by the earthquake; but Blu-ray products still account for a rather low shipment proportion, and the impact will be limited.

Source: Digitimes Research, compiled by Digitimes, March 2011

Source: The Chosun Ilbo, Korea Ministry of Knowledge Economy, compiled by Digitimes, March 2011

Source: The Chosun Ilbo, Korea Ministry of Knowledge Economy, compiled by Digitimes, March 2011

Source: Money Today, Korea Ministry of Knowledge Economy, compiled by Digitimes, March 2011

Topics: Page 2

Realtime news
  • HTC sponsors eSports teams Cloud 9, Team Liquid, Team SoloMid

    IT + CE | 2h 50min ago

  • China software industry posts 2014 revenues of over CNY3.7 trillion, says MIIT

    IT + CE | 2h 54min ago

  • SK Hynix posts record earnings for 4Q14 and 2014

    Bits + chips | 2h 57min ago

  • Global advanced driver assistance systems market to exceed US$90 billion by 2020, says ABI Research

    IT + CE | 2h 59min ago

  • UMC looks to wafer shipment and ASP growth in 1Q15

    Bits + chips | 3h 1min ago

  • Corning reports 4Q14 and 2014 financial results

    Displays | 3h 3min ago

  • Taiwan market: Local retailers expect 20% sales growth from Ultra HD TVs

    Displays | 3h 7min ago

  • Digitimes Research: China smartphone shipments drop 8.8% sequentially in 4Q14

    Mobile + telecom | 3h 12min ago

  • Touchscreen controller IC vendors diversifying product lines

    Before Going to Press | 3h 23min ago

  • Acer online ticket services deserve praise, says founder

    Before Going to Press | 3h 24min ago

  • Digitimes Research: Global tablet shipments grow 16.9% sequentially in 4Q14

    Before Going to Press | 3h 25min ago

  • SPIL nets NT$3.74 per share for 2014

    Before Going to Press | 3h 25min ago

  • SPIL to offer fan-out packaging services in 2016

    Before Going to Press | 3h 25min ago

  • Asustek facing challenges in 2015

    Before Going to Press | 3h 27min ago

  • UMC expects wafer shipment and ASP growth in 1Q15

    Before Going to Press | 3h 29min ago

  • Giga Solar Materials sees booming shipments of PV silver paste

    Before Going to Press | 3h 30min ago

  • TPK expects fingerprint recognition touch panel orders to increase in 2015

    Before Going to Press | 3h 30min ago

  • TV vendors optimistic about WCG LCD TV development in 2015

    Before Going to Press | 3h 31min ago

  • SK Hynix posts record earnings for 4Q14 and 2014

    Before Going to Press | 3h 32min ago

  • China software industry posts 2014 revenues of over CNY3.7 trillion, says MIIT

    Before Going to Press | 3h 32min ago

  • China sets 2015 tentative target PV installation capacity of 15GWp

    Before Going to Press | 3h 33min ago

  • Samsung to increase smartphone production in India, says report

    Before Going to Press | 3h 35min ago

View more

2015 China IC design market forecast

RESEARCH EXTRAS | Jan 23, 10:50

Global economic growth is forecast to reach 3.8% in 2015, up from 3.3% in 2014. From the perspective of the electronics industry though, PC shipments will continue to decline, smartphone shipment growth will drop, and tablet shipments may decline. Despite the...

2015 global AP market forecast and vendor analysis

RESEARCH EXTRAS | Jan 23, 10:46

Digitimes Research estimates that total 2014 AP shipments will reach 1.52 billion units worldwide, up 19.6% from 2013, and in 2015 the global market will see shipments of 1.65 billion units, growing 8.5% on year. The slowdown is mainly due to a shrinking tablet...

Taiwan digital cameras – 4Q 2014

TAIWAN ICT | Jan 28, 10:51

Taiwan makers saw an on-year rise in DSC shipments during the fourth quarter of 2014, as driver IC shortages that had hampered their shipments in the previous quarter eased. But shipments for the entire 2014 continued to fall, and the trend of decline does not...

Taiwan notebooks – 4Q 2014

TAIWAN ICT | Jan 21, 15:53

The notebook market saw significant demand for entry-level devices whose pricing levels were comparable to those of tablets in the fourth quarter of 2014, which maintained Taiwan ODMs' overall shipments at a level comparable to that of the previous quarter. But...

China touch panel industry – 3Q 2014

CHINA TOUCH | Nov 28, 18:54

The third quarter is a traditional boom season for touch panels and therefore China-based touch panel makers saw shipments increase for all major applications.

VOICE 2015 Developer Conference
Wireless broadband developments in Southeast Asia markets
The transition to 4k TV - UHD TV market forecast, 2014-2017
  • Wireless broadband developments in Southeast Asia markets

    As of 2013, the 10 ASEAN nations had a total of over 700 million mobile subscriptions, with the CAGR from 2003-2013 reaching 24%. This Digitimes Research Special Report analyzes the various mobile broadband markets in ASEAN and looks at the respective trends in 4G LTE development for those markets.

  • Greater China touch panel shipment forecast through 2015

    This Special Report provides forecasts through 2015 for Greater China touch panel shipments with breakdowns based on technology (glass, film, resistive), application (smartphone, NB and tablet) and by firm.

  • 2014 global tablet demand forecast

    This report analyzes the main players, their strategies and shipments forecasts for 2014, as well as other factors contributing to either growth or decline in various segments within the tablet market, with a particular focus on Apple, Google, Samsung, and Microsoft, along with whitebox vendors.