About 20-25 million entry-level Android smartphones at contract-free prices of US$150 or below will be sold in the global market in 2011, much more than the 2.5-3 million units sold in 2010, Digitimes Research predicts. Global smartphone sales will hike 54.5% from 2010 to 445 million units in 2011, of which 165 million or 37.1% will be Android models, surpassing Symbian to become the largest smartphone platform. The large growth in entry-level Android smartphone sales will be driven by international, China- and Taiwan-based design houses' standard chip solutions that will facilitate minor and white-box vendors' launch of inexpensive models mostly in emerging markets. While mature markets accounted for more than half of the 2010 global sales of entry-level Android smartphones, emerging markets will dominate the handset segment in 2011. The China market will see demand for 10-13 million entry-level Android smartphones in 2011.

Facing fierce competition in the mobile device market, Acer has decided to replace its CEO and president Gianfranco Lanci. The company may not have to completely abandon its existing strategies of giving more emphasis on marketing than on product R&D because of Lanci's departure. But it definitively must devote more efforts to mobile devices and establish a new business model that leverages its current advantages.Most of the PC brand vendors had a slow start in the tablet PC market. But compared to Hewlett-Packard's (HP) acquisition of Palm, and Dell's and Lenovo's acceleration in unveiling their products, Acer's pace is slower than most of its competitors. Acer tried to establish a place in the LCD TV and smartphone markets, but failed. Lanci has to be held responsible for the failure to expand Acer's product lines.�@�@However, Lanci's departure may pose a risk to Acer, as the regions that contribute 70% of Acer's revenues are still managed by executives close to Lanci. Whether these executives will continue to stay loyal to the new Acer leadership in JT Wang will strongly affect the company's performance for the rest of 2011. In addition to these internal issues, whether Europe's channel retailers, which have strong relationships with Lanci, will continue to support Acer and not defect to Acer's competitors, is also an uncertainty.Acer's strong growths in the past 10 years were mainly driven by the expansion of shipments to regions outside Asia Pacific and Western Europe, where Acer was already strong. Acer also managed to expand its market share in Asia Pacific and Western Europe.But in terms of products, the PC and monitor businesses account for almost all of the companies, while other product lines share only less than 5%. Its major competitors HP and Dell have both achieved strong results from the enterprise software, storage and service markets.Mobile device technologies have see fast development in the past two years and have already started impacting the notebook market, forcing the notebook market to enter the initial period of the mature phase. But the smartphone and tablet PC markets taking off fast.PC and smartphone brand vendors have their own advantages in the tablet PC market. But in terms of supply chain resources and business models, PC brands are in an disadvantaged position. PC brand vendors will have to establish a new strategy for the tablet PC and mobile device marketA comparison of the top-three PC brand vendors' strategies for tablet PCs shows that HP, which acquired Palm in 2010, is expected to be the most qualified players to compete in the next-generation mobile device battle.Dell's strategy is to heavily cooperate with its ODM partners and is willing to try out many different options for its devices to find the best solutions. Although the result is not yet obvious, the strategy should allow the company to have a better understanding of the market and its brand new supply chain.Acer has been focusing on R&D for smartphones after acquiring Eten. But compared to other smartphone brand vendors' investment in R&D, Acer's spending has been far less. Without improvements in revenues from the segment, Acer has been faced with the dilemma of whether it should rely on ODMs the smartphone development to save cost, or to invest in developing its own technologies. Global mobile device shipments, 2013 (m units) Segment Volume Notebook 250 Tablet PC 130 Smartphone 800 Source: Digitimes Research, compiled by Digitimes, April 2011 PC and smartphone vendors' advantages in tablet PC competition Hardware design Software design Key component Manufacturing ability Control over IT retail channel Relationship with telecom carriers PC vendors Better Better Smartphone vendors Better Better Better Better Source: Digitimes Research, compiled by Digitimes, April 2011 Acer's CEO and president in different regions and 2009 revenues CEO and president 2009 revenues (NT$b) 2009 revenues share American market Emmanuel Fromont 153.25 26.1% Europe market Walter Deppeler 294.78 50.1% Asia Pacific market Steven Lin 107.21 (including China) 18.2% Taiwan Scott Lin 32.52 5.5% China Oliver Ahrens N/A N/A Source: Digitimes Research, compiled by Digitimes, April 2011

Microelectromechanical system (MEMS) applications range from automotive, industrial, military, and popular consumer electronics (CE) products such as smartphones and tablet PCs. Disruption to the supply of several components from Japan due to the recent earthquake and tsunami may create some issues for the worldwide manufacturing of MEMS devices.But Digitimes Research believes that the impact on the overall MEMS supply chain may not be serious, as the components that may be in tight supply from Japan are not as crucial as accelerometers, gyroscopes and microphones. They bring added-value to end products, but they are not essential features.Texas Instruments (TI) on March 29 issued a statement saying that shipments from its factory site in Miho, Japan, will not return to normal until September. The facility, which suffered substantial damage during the earthquake, produces DLP (digital light processing) chips used in embedded pico projectors.TI indicated that the company has identified alternative manufacturing sites for about 60% of its Miho facility's production.AKM Semiconductor, a major supplier of magnetic compasses mainly for navigation-enabled products, has seen production at its plant in Shizuoka Prefecture affected by rolling blackouts imposed by Tokyo Electric Power (TEPCO). Output is likely to reduce due to power issues.Seiko Epson, which makes gyros for InvenSense, had to close its Sakata plant in Yamagata Prefecture after the massive earthquake and subsequent tsunami struck the northeast coast of Japan. The company has issued its latest update, revealing that partial production resumed on March 28.InvenSense also outsources production to foundries including Taiwan Semiconductor Manufacturing Company (TSMC), Touch Micro-system Technology (TMT) and Dalsa Semiconductor. Failure of supplies from Japan should have minimal impact on its business.In addition, major producers of MEMS accelerometers and microphones continue their normal operations as their manufacturing sites are located in areas away from the quake-hit northeastern regions or outside Japan.Source: Digitimes Research, April 2011

Before the March 31 announcement of Acer CEO and president Gianfranco Lanci's resignation, Stan Shih founder and shareholder of Acer had made some comments at a press conference on March 29 in Taiwan, already hinting that the CEO may step down in near future.Commenting on Acer's lower-than-expected performance for two consecutive quarters at a press conference on March 29, Shih pointed out the the rise of tablet PCs and smartphones to become new trends, and the changes in the IT market's ecosystem have already far surpassed what Acer's executives can handle, and that Acer's winning strategy from the past had already lost its effectiveness, and the company needed to implement a change in direction.Shih pointed out that Acer was originally set to become the largest notebook vendor in 2011 and be the leading PC vendor in 2012, and the strategy was meant to increase the company's profitability through enlarging the company's economic scale; however, since the fact that economic scale does not necessary equal profitability, implementing a successful transformation will be much more important than becoming number one. Winning in shipment numbers, but losing profitability is meaningless.However, Shih pointed out that he has already stepped out of Acer's operations and was only giving suggestions as a board member. He did not give any clear pointers about how Acer could achieve victory in competition for the "smart online device" segment, saying that Acer's executives are the ones who need to be concerned with that, and that they will need some time to reach a consensus.Shih once said that a successful enterprise needs to start a reorganization every 10 years. It has been around 10 years since Acer spun off Wistron in 2001, and Shih commented that Acer needs to recreate itself since tablet PCs are a completely different ecosystem.Shih believes that Acer should face reality and observe the changes in the ecosystem, especially by acknowledging that the appearance of tablet PCs and smartphones has already significantly changed the IT industry. Tablet PCs are attracting consumers who do not use PCs, to start using PCs, and the changes will definitely impact notebook demand; however, it could also be an opportunity for makers.Shih pointed out that the IT industry should thank Apple for creating a new path and attracting consumers to accept tablet PCs, Acer tried to push tablet PC products in 2000, but failed. Apple has opened up a road for players to follow, and so he believes it should be much easier for others to succeed.Shih also noted that it is still too early to judge the winner of the tablet PC market, and that Acer still has a good basis to allow a transformation, therefore he is not concerned.

Overall supply of touch panel materials has seen limited impact from the massive earthquake and tsunami that hit northeastern Japan, as most of the production plants are located in western Japan away from the disaster areas.ITO is a key material for touch panels. ITO films are needed to make resistive touch and film-based projected touch panels. Although major ITO film suppliers are from Japan, most of their production plants are located away from the disaster area. There are also many ITO suppliers from Korea, Taiwan and China. Therefore, ITO supply is expected to remain normal.For the supply of ITO targets, leading supplier JX Nippon Mining & Metals' Isohara plant in Ibaraki Prefecture and third-largest supplier Tosoh Specialty Materials' plant in Yamagata Prefecture were seriously affected by the earthquake. But second-largest supplier Mitsui Mining & Smelting's plant was not affected. Production outside Japan should help keep sufficient supply of ITO targets.JX is also the leading supplier of treated rolled copper foil used in PCB and its production plant in Ibaraki Prefecture was seriously damaged. But the production plant of the second largest supplier Fukuda Metal Foil & Powder was away from the disaster areas. JX and Fukuda both have treated rolled copper foil production plants in Southeastern Asia and China, and therefore supply for the component will remain normal.Anisotropic conductive film (ACF) is used to bind touch panels with control ICs. Japan-based Hitachi Chemical and Sony Chemical & Information Device together account for 90% of the total ACF market. Hitachi's Shimodate plant and Sony's Kunuma plant are both located close to the disaster areas, but they have confirmed that no damage was done to production equipment and they resumed production on March 16-17. Both plants are expected to be affected by the rolling black-outs but will maintain utilization rates of over 70%. Top-4 ITO film providers Company Location Nitto Denko Hiroshima prefecture Dike Kyoto Teijin Chemicals Hiroshima Prefecture Suzutora Aichi Prefecture Source: Digitimes Research, March 2011 Japan major touch panel makers Company Technology Plant location Note Nissha High-end resistive touch Film-based projected capacitive touch Kyoto Away from disaster areas, no significant damage Gunze Kyoto Away from disaster areas, no significant damage Ishikawa Prefecture Shiga Prefecture Mie Prefecture Glass-based projected capacitive touch Hyogo Prefecture Away from disaster areas, no significant damage Andes (AIS) Glass-based projected capacitive touch Aomori Prefecture Away from disaster areas, no significant damage. Source: Digitimes Research, March 2011

The massive earthquake and tsunami that struck the northeast coast of Japan have not had significant impact on OLED material supply, but may affect entry-level OLED panel applications, according to Digitimes Research.Japan-based players have been developing OLED materials for a long time with Sumitomo Chemical and Showa Denko in the polymer materials segment, Idemitsu Kosan and Mitsui Chemicals in the small molecule segment and TDK Micro Device in the passive matrix OLED (PMOLED) panel segment.TDK Micro Device's facilities located in Ibaraki Prefecture saw partial equipment damage due to the tremor. But the impact on the PMOLED market may be minimal, as Taiwan-based RiTdisplay is the leading PMOLED supplier worldwide.Although the quake has had limited impact on the supply of polymer materials from Sumitomo, the company's R&D schedule is expected to be affected. Sumitomo has a total of nine plants in Japan, of which the Misawa and Chiba plants are closer to the disaster areas. Although no damage to building and equipment has been reported, production is expected to be affected by the rolling black-outs.Sumitomo mainly produces OLED polymer materials at its Osaka plant, which is away from the disaster areas, and supply of OLED materials will be little affected.Fellow polymer material supplier Showa has been hit more by the quake, and shipments to its clients may be affected.Idemitsu is seeing more impacts from the transportation and power supply issues, while Mitsui has not been significantly affected by the earthquake. Although more players are adopting small molecule in the current OLED industry, the earthquake will only have limited effects on the supply, as there are other suppliers, such as US-based Universal Display Corporation (UDC). Damage to Japan-based OLED suppliers Supplier Technology/production Impact on production Impact on industry Panel TDK Micro Device PM OLED panel Partial damage to equipment at Ibaraki Prefecture; production suspended Production mainly for PMOLED; only affects to entry-level applications Polymer Material Sumitomo Polymer materials for OLED, mainly for lighting and display application; acquisition of UK-based fellow supplier CDT in 2007 Osaka production plant away from the disaster area; partial damage to plant at Tsukuba research center in Ibaraki Prefecture Limited impact on material supply; to affect its own OLED R&D schedule Showa Polymer materials for OLED; In addition to display application; cross-licensing with US-based UDC for white OLED lighting technology Chiba plant suspended from March 14-16, resumed production on March 17; to prioritize production for basic chemical products Shipments to polymer material users to be affected; but small molecule material is more popular in the industry Small molecule Idemitsu Small molecule OLED materials; cooperation with Sony in OLED display No equipment damage at Chiba plant despite level-5 quake; to be affected by transportation and power supply issues Company is estimating its material inventory, and may suspend production if material inventory is insufficient Mitsui Small molecule OLED materials; cooperation with Idemitsu for OLED material development Osaka plant is away from disaster areas and not affected none Source: Companies, compiled by Digitimes, March 2011 Earthquake impact on TDK's OLED subsidiaries Plant Location Production Situation as of March 15 Narita TDK Narita, Chiba Prefecture Metal magnet Ready to restart production, but may be affected by rolling black-outs Kofu TDK Minami-Alps, Yamanashi Prefecture Thin film and silicon component Ready to restart production, but may be affected by rolling black-outs Technical Center TDK Ichikawa, Chiba Prefecture Component development Operation continues, but may be affected by rolling black-outs Media Tech Subsidiary Chuo, Yamanashi Prefecture Magnet tape for data backup, video for TV broadcasting company Ready to restart production, but may be affected by rolling black-outs TDK Micro Subsidiary Kitaibarai, Ibaraki Prefecture OLED Suspended for damage inspection Source: Company, compiled by Digitimes, March 2011

The massive earthquake in Japan has impacted the supply chain of Blu-ray Disc (BD) players. Blue laser diodes used in BD players' optical pick-up head units (OPU) are mainly produced in Japan. Sony's blue laser diode manufacturing subsidiary in Fukushima, Japan - Sony Shiraishi Semiconductor - has been suspended due to the earthquake. Digitimes Research believes that this could seriously disrupt the supply of BD devices, especially Sony's Playstation 3 (PS3), if the plant suspension prolongs.In addition to Sony Shiraishi Semiconductor, Sony also shut down the operations of Sony Chemical & Information Device's two plants in Miyagi that manufactures DB disc and smart cards; Sony Energy Devices' two plants in Fukushima that manufacture lithium batteries; and a plant in Ibaraki that manufactures DVD and CD discs.Sony Shiraishi Semiconductor's another plant in Miyagi which also makes blue laser diodes has also been suspend from due to facility and equipment damage.Sony's BD OPUs are mainly produced at the company's plants outside Japan. Although they were not affected directly by the earthquake, the shortage of the blue laser diodes is expected to hamper their production.Sony's blue laser diode production mostly caters to the company's own brand devices and Sony sold more than 21 million BD devices in fiscal 2010 with PS3 accounting for 15 million units and BD players and recorders combining for six million units.Blue laser diodes are used to create laser beams for devices to read data on BD discs and the component is also a kind of semiconductor. Sony's semiconductor business include two main subsidiaries - Sony Semiconductor Kyushu and Sony Shiraishi Semiconductor.Sony Semiconductor Kyushu has four plants for producing digital image and sensor components. They are located in Nagasaki, Kumamoto, Kagoshima and Oita, all on Kyushu Island in southwestern Japan, away from earthquake-hit northeastern region. But the blue laser diode maker Sony Shiraishi Semiconductor in Fukushima has been damaged by the quake. Sony may have to find alternative supply of blue laser diodes.In addition to Sony, Japan-based players such as Sharp, Nichia, Rohm and Panasonic are all suppliers of laser diodes with plants in Japan. But their plants are all located away from northeastern Japan. Panasonic's and Rohm's plants are in Okayama; Sharp's plant is in Hiroshima; Nichia's plants are in Kagoshima and Tokushima; and Sanyo's plants are in Tottori. Sony is the only laser diode supplier that has been hit by the earthquake.BD OPUs are usually tailor-designed for specific blue laser diodes, and therefore OPU makers usually depend on a single source of blue laser diode supply. Redesigning blue laser diodes requires more than three months. OPU makers are likely to have difficulties replacing their current laser diodes from Sony.If Sony Shiraishi Semiconductor is unable to resume its operation in the near future, Sony will likely halt its blue laser diode supply to outside clients and reserve its capacity for in-house use. If that happens, its OPU clients will have to be forced to seek help from other suppliers. Sony's laser diode clients have pointed out that almost all outside OPU makers have products that adopt laser diodes from, Sony, which has had advantage in terms of cost and production capacity.But by stopping supplies to outside clients, Sony will risk losing orders from these clients who will need to redesign their existing models or design new models using laser diodes from new sources in order to maintain their shipments. Even if Sony manages to resume all its capacity, these clients will not shift the orders back to Sony due to compatibility issues.Since Sony is also likely to adopt laser diodes or OPUs from outside sources to resolve its component shortage crisis, OPU suppliers including Sharp, Panasonic, Hitachi, Toshiba and Sanyo may all benefit from the orders. Sanyo, which ships most of its OPUs to outside clients, currently has the highest share of the OPU market. But as some of the company's OPU models also use Sony's blue laser diodes, its OPU shipments may also be affected.Game consoles have an average life cycle of over five years, versus BD player's one year. Therefore, a game console's basic structure cannot be changed often, especially crucial components such as BD OPUs and blue laser diodes. As a result, Sony is unlikely to find a replacement OPU for its PS3 console and may have to prioritize its support for the production of the device. As PS3 currently accounts for 70% of Sony's BD products, Sony's blue laser diode supply issue may seriously hamper PS3 shipments. Sony product shipments, FY 2010 (m units) FY2009 FY2010 (estimated in Oct 2010) FY2010 (estimated in Feb 2011) LCD TV 15.6 25 23 Video Camera 5.3 5.3 5.3 DSC 21 23 24 BD Recorder 0.7 1 1 BD Player 3.3 5.5 5 DVD Player 11.5 11 11 PS3 13 15 15 PS2 7.3 6 6 PSP 9.9 8 8 Source: Sony, compiled by Digitimes, March 2011Sony PS3Photo: Digitimes archive

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 Industries 2010 global market share Impact LCD panel 51% May be affected by component shortages from Japan DRAM 58% 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 48% Secondary battery cell 39% Designers of battery pack ICs have shut down operations due to the earthquake; will have impact on battery shipments. ODD 50% 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

Since Japan is second to South Korea in importance to the global memory industry, spot price for DRAM and NAND flash products both rose on the first trading day after the March 11 earthquake. In the NAND flash maket, 32Gb MLC chips went up 20.5% in one day, and 16Gb MLC chips gained 16.8%. DRAM spot price, which was previously trending down, also posted a 7% increase for the day. The price jumps also signify that buyers are expecting the disaster to impact future memory supply.In addition to concerns about damage to memory production plants, the main manufacturing facilities of Shin-Etsu Chemical, the largest silicon wafer supplier worldwide, are located in Fukushima Prefecture. Upstream wafer shortages could further put stress on the global memory supply chain.

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.Source: JEITA, compiled by Digitimes, March 2011