Though several major IC packaging material suppliers have resumed operations at their earthquake-affected plants, there is still growing concern that production will be hampered by the country's damaged infrastructure including transportation systems and electrical grids.In 2010, only one Japan-based company was among the worldwide top-10 makers of semiconductor packages. However, leading IC packagers, such as Advanced Semiconductor Engineering (ASE), rely much on Japan for production material supplies.Shin-Etsu Chemical's major factory site for IC packaging materials, which is located in Gunma Prefecture, was shut down following the earthquake. Manufacturing operations at the facility have restored since early last week, but are still being affected by rolling blackouts conducted by Tokyo Electric Power (TEPCO).In addition to silicon wafer making, Shin-Etsu also produces silicones, synthetic quartz and other semiconductor manufacturing-use chemicals and materials. Its major factory site for wafers in Fukushima prefecture remains closed.Chemical and material company Nitto Denko has revealed that no material impact from the earthquake were caused to its employees and facilities. The company's main factory site for IC packaging materials is located in Saitama Prefecture, which is in the rolling blackout zone. Nitto issued a statement saying that "it is becoming increasingly difficult to follow the normal production schedule, due to the enforced power restrictions put in place."Hitachi Chemical has announced that production of epoxy molding compounds for semiconductors and partial production of carbon anode materials for lithium ion batteries would resume in the week of March 22. The company expects production to return to normal by the end of March.Senju Metal Industry, a leading supplier of BGA solder balls for semiconductor, said it has partially resumed operations at the plants in Tochigi and Iwate prefectures, areas affected by the quake. No major damage to the facilities was found, the company added. "We have adequate raw materials and supplies to continue our production for a while," Senju said in its most recent statement.Kyocera Chemical, which makes semiconductor materials such as epoxy resin products, said its plants in Fukushima and Yamagata prefectures remain closed due to the earthquake's impact on utility infrastructure. But the affected plants in the eastern region of Japan have mostly recovered from the disaster with production resumed recently.Source: Digitimes Research, March 2011 Digitimes Research: Global top-10 IC packagers, 2010 (US$m) 2010 rank Company Headquarters 2010 revenues 2009 revenues Y/Y 1 ASE Taiwan 3,851.9 2,595.4 48.4% 2 Amkor US 2,939.0 2,179.1 34.9% 3 SPIL Taiwan 1,956.3 1,721.4 13.6% 4 STATS ChipPAC Singapore 1,677.9 1,325.7 26.6% 5 PTI Taiwan 1,158.9 902.3 28.4% 6 Shinko Japan 1,058.0 1,138.7 (7.1%) 7 UTAC Singapore 1,000.0 601.0 66.4% 8 ChipMOS Taiwan 572.5 367.6 55.7% 9 JCET China 482.3 346.8 39.7% 10 YTEC Taiwan 436.2 318.4 31% Source: Digitimes Research, March 2011

Japan is an important supplier of upstream OLED materials. Sumitomo Chemical and Showa Denko are the main material producers of polymer-based OLED, and Idemitsu Kosan and Mitsui Chemicals are in the small molecules camp. In addition, TDK Micro Device manufactures passive matrix OLED (PMOLED) panels.Sumitomo's OLED material production only saw modest disruption from the earthquake compared with Showa Denko's operations, which could cause shipment disruptions for clients.Idemitsu are mainly affected by the transportation and power outages, and Mitsui's operations are relatively unharmed. Though more companies utilize small molecules materials, there are still other supply sources such as US-based UDC. Overall, OLED material should not be impacted.Since TDK makes PMOLED panels, it will not affect AMOLED panel supply. Moreover, the world's largest PMOLED panel maker is Taiwan's Ritek.

With major silicon wafer plants remaining closed following the recent earthquake and tsunami that struck Japan, there is growing concern in the memory industry whether chip companies are preparing for any possible disruption to production.Potential wafer supply disruptions may actually push the memory industry, especially the DRAM sector, to reach a balance between supply and demand. There has been a substantial rise in DRAM supplies since the second half of 2010.Digitimes Research previously forecast that the DRAM industry would be dogged by oversupply as chipmakers ramp up output through conversions to new technology nodes. Worldwide DRAM supply would exceed demand by 28% in 2011, according to estimates made in January 2011.Major DRAM producers plan to grow their capacity for 2011 between 40% and 70%, with any of their output growth expected to outpace the rise in overall demand.As for NAND flash, a short supply of silicon wafers would just soften chipmakers' efforts to increase their capacity in 2011. Major NAND-chip producers including Samsung Electronics, Toshiba and Hynix are all gearing up to enter the 20nm-class technology era in 2011. Samsung, Toshiba and Micron Technology are also looking to implement their new fab plans.Despite concerns about wafer supply disruptions caused by the earthquake, the NAND flash industry is still expected to see its overall bit growth reach 78% in 2011 to 9.33 billion GB.Shin-Etsu Handotai's (SEH) main silicon wafer plant in Fukushima Prefecture remains closed with no time-frame for when it will re-open, according to parent company Shin-Etsu's latest statement about SEH's business status following the earthquake. Monthly capacity at the facility accounts for more than 60% of SEH's overall production capacity.Sumco has been less affected due to its main factory sites being located away from quake-hit areas. Production at its damaged plant in Yamagata Prefecture has been shifted to other plants in the Kyushu region, according to Sumco's most recent status update.Source: Digitimes Research, March 2011

Three major Japan-based suppliers of semiconductor manufacturing equipment have suspended operations at several of their plants in the earthquake-ravaged areas with no timeframe for when they will re-open. Lithography system provider Nikon suffered the most as its main factory sites are located in Miyagi and Tochigi prefectures, areas particularly affected by the disaster.Nikon revealed that its group companies, including Sendai Nikon (Natori, Miyagi Pref.), Miyagi Nikon Precision (Zao-machi, Katta-gun, Miyagi Pref), Tochigi Nikon (Otawara, Tochigi Pref), Tochigi Nikon Precision (Otawara, Tochigi Pref), and other subsidiaries as well as its plants suffered damage to part of the equipment and buildings. According to the company's latest update, operations there remain closed.Nikon ranks only after ASML in the worldwide lithography equipment market. Nikon has estimated that for the fiscal year through March 2011, shipments of its lithography tools would return to the level of 78 units shipped two years ago. Shipments slid to only 49 units in the company's fiscal 2010.Also among the leading suppliers of semiconductor lithography, Canon disclosed that the earthquake had a significant impact on its operating sites in the prefectures of Ibaraki and Tochigi, and five Canon Group companies located in Aomori, Fukushima and Ibaraki. The facilities have been shut down with no concrete schedule determined yet for when production may resume. Canon said it would consider shifting production to other fabs not damaged by the earthquake if necessary.Canon's chip-equipment unit is mainly located in Kanagawa Prefecture, and therefore has seen limited impact from the recent crisis. However, fab-tool manufacturing at the factory sites in Ibaraki and Tochigi has been disrupted.Canon's lithography-tool shipments are projected to top 47 units in the company's fiscal 2011, compared to the 29 units shipped a year ago.Nikon and Canon currently hold a combined 44% share of the global lithography equipment market, with major clients including foundry Taiwan Semiconductor Manufacturing Company (TSMC).Tokyo Electron (TEL), which ranks Japan's largest semiconductor production equipment supplier and the second-largest vendor worldwide, said it is still assessing the damage. The company indicated that three facilities around the affected area - Tokyo Electron Tohoku for thermal processing systems (Oshu City), Tokyo Electron AT for etch systems (Matsushima City) and Tokyo Electron Technology Development Institute (Sendai City) - have suspended operations.Operations at Tokyo Electron Tohoku are expected to resume in two weeks, and operations at Tokyo Electron AT may restore in two to four weeks. Tokyo Electron Technology Development Institute is set to re-open in one week, once the water supply is restored. All of these dates are dependent upon infrastructure and supplier status. In the meantime, TEL noted that it has moved to expand production areas for etch systems in the unaffected Yamanashi factory.TEL's main customers include TSMC and panel supplier TCL.Source: Digitimes Research, March 2011Source: Digitimes Research, March 2011

The global hard disk drive (HDD) industry, already facing challenges from solid state drives (SSDs), cloud computing and limitation of vertical read-write technologies, is expected to face even more challenges resulting from the March 11 earthquake in northeastern Japan, which has severely damaged the plants of local HDD component makers including hard disk maker Showa Denko, and HDD-use substrate makers Furukawa Denko and Kobe Steel. These makers have all reported damage to facilities as well as injuries of employees and have shut down their operations pending further evaluation.Showa Denko currently has about 25% share of the global hard disk market and in addition to its plants in Japan, the company also has plants in Taiwan and Singapore that can fill in for the suspended capacity at the damaged plants in Japan. Since Showa Denko's clients Western Digital and Seagate also have a portion of their hard disk supplies from in-house production, Digitimes Research believes that the hard disk market will not see any immediate shortages.Furukawa Denko and Kobe Steel produce HDD-use substrates using aluminum mainly for desktop PCs. The two makers together dominate the entire HDD-use substrate market. Since their capacities are all located in the disaster zones, if the two makers continue to shut down their operations, the HDD industry may see substrate shortages.With Western Digital set to acquire Hitachi's HDD subsidiary Hitachi Global Storage Technology, only four major makers will remain in the HDD industry - Western Digital, Seagate, Toshiba and Samsung Electronics. Western Digital and Seagate both produce their hard drives in house, while Toshiba's and Samsung's shipments are partly from in-house production and partly from outsourcing partners. The HDD makers have different lineups of component suppliers, but as the number of HDD component suppliers is limited, any impact on the upstream component sector should have a direct effect on the downstream HDD makers.An HDD is constructed with key components such as magnetic read/write heads, disks and electric motors. Japan-based TDK, Showa Denko and Fuji Electric are all suppliers of magnetic read/write heads and disks, while Western Digital and Seagate both manufacture part of their read/write heads and disks, and source from Japan makers.TDK currently owns about 30% of the global magnetic read/write head market and since its plants in Japan are away from the disaster zones, the company has not seen much impact from the earthquake. However, Showa Denko's two disk manufacturing plants in disaster-stricken areas have shut down.Showa Denko currently can produce about 22 million disks each month, accounting for 25% of the global market. In addition to its suspended plants in Chiba and Yamagata in Japan, the company also has production lines in Taiwan and Singapore. The company started expanding capacity at its Singapore facilities last year and the new capacity will be able to cover the shortfall at its Japan plants.Supply of HDD-use substrates and electric motors is dominated by Japan-based makers. Hoya is a major supplier of glass substrates, while Kobe Steel is a main player for aluminum substrates. Nihon Densan is a top supplier of motors. Most of the substrate and motor makers including Hoya, Nihon Densan and Konica Minolta do not have plants in the disaster zones, and they only have seen limited impact from the earthquake. But both Furukawa Denko and Kobe Steel have plants in the disaster zones.There are two types of materials used for HDD-use substrates - aluminum and glass. The substrates are mainly supplied to players such as Japan-based Showa Denko and Toyokoban as well as Seagate and Western Digital. Due to its low price, the aluminum substrate has been broadly used in the PC market, especially the desktop segment, while glass substrate, which features strong shock-resistance, is gradually penetrating into the notebook market. Since aluminum substrate is still the mainstream materials for hard drives, the substrate industry is almost dominated by Kobe Steel and Furukawa Denko.Kobe Steel's and Furukawa Denko's HDD substrate plants are both located in Tochigi, Japan with Kobe Steel capable of producing 30 million and Furukawa Denko 20 million units each month. Since both companies' capacities are all located in the disaster zones, their production issues should significantly impact the HDD industry, especially the desktop segment.HDD makers have some of the magnetic read/write head and hard disk supply coming from their in-house production, but they still have to rely heavily on substrates and electric motors from Japan suppliers.Both Seagate and Western Digital are capable of producing hard drives and can make adjustments when needed, and the pair should not see much trouble from possible hard drive shortages. As for Toshiba and Samsung, the two can also receive support from Showa Denko's overseas plants to resolve their shortage issues.Since HDD substrates are mainly supplied by Kobe Steel and Furukawa Denko, it means that even if the two makers can repair their damaged equipment quickly, their production would still be affected by Japan's rolling power cuts.Hoya and Nihon Densan were not impacted by the earthquake, but they will still feel the impact of the power brownout policy. They might consider moving their production overseas to lower their revenue losses. HDD makers' component supply status HDD maker HDD Magnetic read/write head Hard disk HDD substrate Electric motor Seagate All in-house Partly in-house, partly outside supply Party in-house, partly outside supply All outside supply All outside supply WD All in-house Partly in-house, partly outside supply Partly in-house, partly outside supply All outside supply All outside supply Toshiba Partly in-house, partly outside supply All outside supply All outside supply All outside supply All outside supply Samsung Partly in-house, partly outside supply All outside supply All outside supply All outside supply Partly in-house, partly outside supply Source: Digitimes Research, compiled by Digitimes, March 2011Source: Digitimes Research, compiled by Digitimes, March 2011Source: Digitimes Research, compiled by Digitimes, March 2011Source: Digitimes Research, compiled by Digitimes, March 2011Source: Digitimes Research, compiled by Digitimes, March 2011Source: Digitimes Research, compiled by Digitimes, March 2011Source: Digitimes Research, compiled by Digitimes, March 2011

Operations at most of Sony's earthquake-damaged plants remained suspended as of March 17. Sony: Latest conditions about the impact of earthquake (as of March 17) Internal units or subsidiary makers Location Product line Latest condition Sony Chemical and Information Device Plant in Tagajyo City, Miyagi Prefecture Magnetic tapes, Blu-ray Disc discs Restoration is difficult in the short-term due to damage caused by the tsunami Plant in Tome City, Nakada/Toyosato Sites, Miyagi Prefecture Optical devices, IC cards Power and water was increasingly supplied toward the original level, on the way to resume operation Plant in Kanuma City, Tochigi Prefecture Anistropic conductive film (ACF) Resumed production of some products on March 15, resumed operation of part of equipment on March 16, but still suffered insufficient supply of power and materials Sony Shiroishi Semiconductor Miyagi Prefecture Semiconductor laser pick-up devices Buildings and equipment were slightly damaged, on the way to resume operation Sony Energy Devices Plant in Koriyama City, Fukushima Prefecture Li-ion batteries Buildings and equipment were slightly damaged, on the way to resuming operation; Japan government suggested that the two plants not resume operation and employees stay at home due to the risk of radiation of radioactive particles; The two plants are more than 50km away from the nuclear power plant in crisis and are not within the government-specified spatial scope for compulsory evacuation (Tokyo is 230km away from the power plant) Plant in Motomiya City, Fukushima Prefecture Plant in Tochigi Prefecture Has stopped production voluntarily Sony Manufacturing Systems Plant in Kuki City, Saitama Prefecture IC packaging/testing equipment Has resumed normal operation Sony DADC Japan Plant in Ibaraki Prefecture CD, DCD and other types of optical discs Buildings and equipment were slightly damaged, on the way to resume operation Sony Corporation Sendai Technology Center Tagajyo City, Miyagi Prefecture Has stopped operations due to earthquake Sony Corporation Atsugi Technology Center Atsugi City, Kanagawa Prefecture Has stopped operations voluntarily Source: Sony Taiwan, compiled by Digitimes, March 2011Holy StonePassive component maker Holy Stone has announced that the tantalum capacitor plant of its Japan-based subsidiary Holy Stone Ploytech Company (HPC) located in the Fukushima prefecture will resume operations on March 22. The plant was temporarily shut down after the March 11 earthquake.HTCTaiwan-based smartphone vendor HTC's supply chain has not been influenced by the earthquake in Japan, and March-April shipments are on schedule, according to company CEO Peter Chou speaking at the Taiwan, Technology and Beyond conference in Taipei on March 16.MediaTekIC design house MediaTek on March 15 said that the recent earthquake offshore of Japan will not affect the company's operations. MediaTek indicated that its handset chipsets are mostly shipped to white-box manufacturers in China with end-use devices powered by its chipsets targeted at emerging markets. As for brand vendor clients, MediaTek supplies medium-to-low-end solutions to LG Electronics and Motorola, which mainly manufacture in China, Taiwan and Southeast Asia, with end-use devices also aimed at emerging countries. Though some industry observers are concerned about shipments to Sharp, the Japan-based vendor outsources via the ODM model and handsets are made in China and will not be distributed in Japan.TSMCTaiwan Semiconductor Manufacturing Company's (TSMC) target of 20% growth in 2011 sales remains unchanged, chairman and CEO Morris Chang said on March 16. TSMC expects no material impact from the recent earthquake in Japan on its 2011 sales. TSMC is unlikely to face possible wafer supply disruptions, because the company has more than four suppliers, Chang indicated. However, Chang pointed out, the company is unsure whether the event will affect its expansion plans for 2012. Deliveries from its equipment suppliers in Japan may be disrupted by stoppages in their production and the damage to Japan's infrastructure.UMCUnited Microelectronics Corporation's (UMC) Japan subsidiary UMCJ, an 8-inch fab, is located in Tateyama City, Chiba Prefecture, where the earthquake on March 11 recorded 5.0 in magnitude. All UMCJ employees were evacuated and nobody was injured. UMCJ's equipment, accounting for 3-5% of UMC's total foundry capacity, was not damaged and is in the process of calibration for resuming operation. Thus, the earthquake has not substantially brought any financial or operational impact on UMC.

Looking at TFT LCD equipment supply, although South Korea has improved its own equipment production capability in recent years, it still relies heavily on Japan for PECVD, sputter units and steppers.Out of all the TFT LCD array equipment companies in Japan, Nikon and Canon, which dominate the stepper market, were particularly hit hard by the March 11 earthquake, and could send ripple through out the global TFT LCD equipment supply chain. Japan is the largest producer of LCD-use steppers.Nikon represents 50-60% of the worldwide stepper market, and Canon about 40-50%. Nikon and Canon shipped 45 and 38 developers in 2009. The two companies have virtually monopolized the global market.Nikon's and Canon's LCD stepper plants are located in areas stricken by the earthquake. The facilities have sustained structural damage and are experiencing power outage that has halted production operations. The two companies still have no precise schedules on when production can resume.Nikon has subsidiaries across Japan. The subsidiaries affected by the earthquake are Sendai Nikon, Miyagi Nikon Precision, Tochigi Nikon and Tochigi Nikon Precision. Some buildings and equipment have sustained damage. Miyagi Nikon Precision and Tochigi Nikon Precision manufacture semiconductor and LCD stepper components.Nikon is currently the leader in small- to medium-size LCD steppers. Its subsidiary Miyagi Nikon Precision supplies small-to-medium-size TFT LCD steppers for smartphones. It has previously planned to build a new facility nearby and commence production in July. However, due to the earthquake, the expansion plan has been moved back, and will likely impact the schedules of Japan and South Korea panel makers for expanding smartphone-use panel output.Nikon shipped 62 LCD-use steppers in 2010, up from 45 units in 2009. In 2010, shipments of equipment for 7G or above totaled 33 units, about 53.2% of total shipments. The company is projected to grab a 60% share of the global developer market in 2012.Canon also has production plants throughout Japan. The locations affected by the earthquake are the offices in Utsunomiya, Ami and Toride. Schedules for resuming operations are undetermined due to power outage, building damage and production shutdown.The Utsunomiya office is responsible for the research and development of LCD steppers and houses a research center. The Ami office, which mainly produces steppers, will affect production and shipments. Toride mostly manufactures imaging business machines.With LCD panel makers resuming capacity investments in the second half of 2009, Canon saw its stepper shipments rise from 38 units in 2009 to 56 unit in 2010. The company's target set prior to the earthquake was 38 units in 2011.In addition, China now houses a large percentage of the world's new TFT LCD production lines. With many facilities based on 7G or above technologies scheduled to begin volume production in the second half of 2011 to 2012, Digitimes Research believes that TFT LCD companies that need steppers will likely see delays. Major Japan LCD array equipment makers and South Korea's own production capability Japan equipment makers South Korea produces more than 50% on its own demand South Korea produces less than 50% on its own demand ULVAC PECVD, sputter unit Nikon Stepper Canon Sputter unit, stepper unit Tokyo Electron (TEL) Developer Dry-etching unit, photoresist coater, DNS Wet-etching unit, cleaner, stripping unit, developer Photoresist coater, developer Shibaura Mechatonics Cleaner, developer, stripping unit None Source: Companies, compiled by Digitimes, March 2011 Damage to Nikon and Canon production plants Plant locations Earthquake scale Damage Nikon Miyagi and Tochigi prefectures 5-6 Structural and equipment damage; schedules for resuming production undetermined Canon Miyagi and Ibaraki prefectures 6 Stepper plants shut down on March 14; schedules for resuming production undetermined; structural and equipment damage; affected by power outages Source: Companies, compiled by Digitimes, March 2011Source: Digitimes Research, March 2011Source: Digitimes Research, March 2011Source: Digitimes Research, March 2011

The impact the Japan earthquake has on photovoltaic (PV) inverters will be determined by the supply of insulated gate bipolar transistor (IGBT) since Japan represents 30% of global production output. An IGBT shortage caused inverter shipments delays in 2010, and the earthquake has brought supply of the key component back to the spotlight. The plants of Japan-based IGBT makers Mitsubishi Electric, Fuji Electric and Toshiba are not located near the disaster areas and are unaffected by power outages at the moment. Digitimes Research believes the inverter upstream supply chain should see only slight disruption.Since Japan makes up a very small percentage of inverter production worldwide and its shipments are typically distributed domestically, global impact should be minimal. Most Japan-based inverters companies are unaffected. Only Meiden's facility in Shizuoka Prefecture is experiencing aftershocks and power blackouts.Japan shipped 980MW of inverters to account for a 5% global market share in 2010. Germany is the largest inverter maker with 48%, followed by the US at 14%. The rest of Europe represents a 27% and Asia (excluding Japan) about 6%.Maiden's inverter facility is located in Shizuoko Prefecture. Though no serious damage has been reported, it is part of Tokyo Electric Power Company's power brownout areas and future production operations could be impacted. On March 15, a 6.0-level earthquake hit the prefecture, and aftershocks are likely. Other major inverter plants are located away from the disaster areas.The concern, however, should be on the impact on IGBT and MOSFET supplies. IGBT represents 13% of overall inverter cost and 66% of the cost of power electronic components.Infineon and Semicron Electric have the highest market share of the Inverter-use IGBT market, and their products are adopted by most Europe and US-based inverter makers. Taiwan-based inverter companies mainly use IGBT from the US and Europe as well.Japan's Mitsubishi, Fuji and Toshiba mostly manufacture IGBT for home appliances. Their share of the inverter sector is about 30%. Taiwan-based inverter makers have diversified IGBT supply channels, and since most have inventory on hand, no impact from the earthquake is expected.Toshiba mainly produces IGBT overseas in China, Malaysia and Thailand. Moreover, the plants of Mitsubishi and Fuji are located far way from disaster areas and are currently unaffected by the earthquake. PV inverter cost breakdown Item Percentage PCB and other components 30% Production 23% Packaging 19% Power electronic components 13% Magnetic components 10% Testing 5% Source: Yole, Nikkei, compiled by Digitimes, March 2011 Cost breakdown of power electronic components in PV inverters Item Percentage IGBT 66% Coupler and others 13% Logic IC 8% Analog IC 5% Micro components 4% Optical semiconductor 4% Source: Yole, Nikkei, compiled by Digitimes, March 2011 Global PV inverter-use IGBT makers Company Country Supply status Infineon Germany Adopted by most US and Europe inverter makers Taiwan inverter makers mainly adopt Europe- and US-made IGBT Semicron Germany Fairchild US International Rectifier US Mitsubishi Japan Account for 30% of global IGBT market Some Tawan-based inverter makers adopt their IGBT. Since they have inventory on hand, little impact is expected Fuji Japan Toshiba Japan Source: Companies, compiled by Digitimes, March 2011Source: Companies, compiled by Digitimes, March 2011Japan's PV inverter plants and capacitiesSource: Digitimes Research, March 2011Japan's IGBT plantsSource: Digitimes Research, March 2011

As the epicenter of the magnitude 9.0 earthquake that struck off the coast of Japan on March 11, 2011 was located close to the northeastern prefecture of Miyagi, the local area has suffered catastrophic damage. But Miyagi is located some distance from the areas where Japan's panel industry is concentrated. As Japan's TFT LCD factories and component plants are mostly located in central and southern Japan, Digitimes Research believes the recent earthquake is not predicted to have a major impact on the majority of key panel component suppliers in Japan.Factories located in areas where the magnitude of the earthquake was relatively high (5-lower or above, according to the JMA seismic intensity scale used in Japan) include the Asahi Glass (AGC) plant in Yonezawa; Hitachi and IPS Alpha's plants in Mobara, Chiba (3.8G, 4.5G and 6G); NEC's 3G plant in Akita; DNP and Toppan's old color filter (CF) production lines; Fujifilm's LCD optical film plant; and the former CF factory of Andes, which was subsequently reorganized under Japan's Civil Rehabilitation Law to become a glass touch sensor plant.The more seriously affected TFT LCD panel factories include Hitachi and IPS Alpha's plants in Mobara, Chiba and NEC's 3G plant in Akita. But these facilities all essentially consist of older production lines. While Hitachi remains one of the main global suppliers, the majority of the other panel production lines have already been demoted to second or third tier plants. The earthquake is therefore not anticipated to have a major impact on global panel supplies.Turning to glass substrates, Corning's Japan facilities and Asahi Glass (AGC) have been fortunate, as both have indicated that the earthquake has had little or no impact on their factories. Corning had already been forced to rely on Corning Taiwan's factories to supply glass substrates following stoppages at its Shizuoka plant caused by a previous earthquake.The glass substrate factory hit hardest was the Asahi Glass (AGC) plant located in Yonezawa, Yamagata Prefecture, where seismic intensity was rated at 5-upper; however, production has not stopped at the plant. Asahi Glass has indicated that although the earthquake has resulted in production stoppages at its Kashima, Keihin and Chiba plants, there has been no major damage to any of the firm's own factories. Corning's factory in Shizuoka Prefecture was subjected to a seismic intensity of four; the company has indicated that the recent earthquake has had no effect whatsoever on this factory.The earthquake may prove to have a more serious impact on TAC film, a key component of polarizers, as Fujifilm's polarizer TAC film plant in Minamiashigara, Kanagawa Prefecture is located in an area where the earthquake's intensity was rated at 5-lower (JMA scale). Japan's two largest manufacturers account for more than 90% of global TAC film supplies. However, as Fujifilm, the largest manufacturer, has significantly expanded capacity at its facilities in Kumamoto Prefecture on the island of Kyushu, and the number two supplier Konica Minolta has already completed the construction of its new factory in Kobe, the overall effect on supplies is still projected to remain within manageable levels.Supply of anisotropic conductive film (ACF), which bonds driver ICs, has not seen much impact from the earthquake. Hitachi Chemical and Sony Chemicals account for a total of 90% of the global ACF market. Their major ACF facilities in Japan were not damaged in the quake but were temporarily shut down due to power outages. If power shortages prolong in Japan, their production may be affected.It is worth noting that the earthquake may have a more serious impact on DNP's CF factory located in Kazo, Saitama Prefecture, where the earthquake's seismic intensity was rated at 5-lower. Toppan's CF factory in Niiza, Saitama Prefecture was also hit with a seismic intensity of 5-lower. Fujifilm's polarizer TAC film plant in Minamiashigara, Kanagawa Prefecture is located in an area hit with a seismic intensity of 5-lower, and may also be more seriously affected. Earthquake impact on Japan's LCD component industry Component Impact Panels The major panel factories are located far from the epicenter of the earthquake, and the overall effect has been small. Sharp's 8.5G and later generation TFT LCD panel factories have all been designed with enhanced earthquake protection. Glass substrate The two largest manufacturers Corning and AGC have indicated that there has been little or no impact on their facilities. Color filter As factories in many countries source color filters domestically, the global impact on this sector will be small. Optical film Fujifilm's TAC film plant in Minamiashigara, Kanagawa Prefecture was subjected to a relatively high seismic intensity. However, Fujifilm has significantly increased capacity at its other plants, which will reduce the impact on its supplies. Supply of ACF has not seen much impact. Source: Digitimes Research, March 2011The earthquake has little effect on glass substrate supplies from Corning and AGCSource: Digitimes Research, March 2011

Panasonic, Canon and Nikon have temporarily closed their digital camera and component plants in northeastern Japan following the March 11 earthquake and tsunami.AVC Networks Company, a subsidiary of Panasonic, shut down its high-end digital still camera (DSC) assembly line in Fukushima because plant buildings were damaged. But Digitimes Research believes that the impact on Panasonic's overall DSC production or the global DSC market will be limited, as the Fukushima factory accounts for only 10% of AVC's total DSC capacity, with the remaining 90% located in Xiamen in southeastern China. In addition, Panasonic's DSC production is relatively small.Nikon has closed four factories in the earthquake-stricken region, with its Sendai, Miyagi Prefecture plant, which makes DSLR (digital single-lens reflex) camera bodies, damaged the most. But Nikon has set up its main DSLR production base in Thailand, the Sendai factory accounts for only 10% of Nikon's total capacity. Therefore Digitimes Research does not expect the shutdown to substantially impact Nikon's DSLR camera business operation.Sony, Panasonic and Sharp together occupy over 90% of the global production of CCD image sensors. While the three companies' CCD image sensor factories are not located in the earthquake-devastated region, reduced power supply due to Japan government's brownout measure may impact their production. The three companies are main suppliers for Taiwan-based DSC makers, who may see short supply of CCD image sensors.Japan DSC makers manufacturing locations (including CCD production)Source: Digitimes Research, March 2011