Demand in the PV market is continuing to flourish into the first half of 2011, and as shortages of materials continue, the effect of the March 11 earthquake on the polysilicon materials sector is being closely watched. The four Japan-based firms producing polysilicon materials mainly utilize their capacity to supply semiconductors, with the exception of M. Setek. Moreover, Japan only accounts for a small proportion of global capacity for solar-grade polysilicon materials. For all these reasons, the earthquake will have only a limited impact on global supplies of PV materials.If we look at Japan-based manufacturers' position as global leaders in PV module materials, it is clear that if the regional electricity supply restrictions continue, the existing problem of thinly stretched supplies of module peripheral materials is only likely to be exacerbated.Japan plays an important role in polysilicon upstream materials. Of the four polysilicon manufacturers located in Japan, only a portion of the capacity of Tokuyama and the AUO-subsidiary M. Setek is concentrated on the PV market, with the remainder focused on polysilicon for semiconductor use.Tokuyama's polysilicon factory is located in Yamaguchi Prefecture, where the impact of the earthquake has been limited. However, M. Setek's facilities are located in the heart of the disaster area, and have therefore been more seriously affected. Some 3,000 tons of M. Setek's current capacity of 7,000 tons has an actual effect on polysilicon supplies, while the remaining 4,000 tons is currently engaged in trial production. The impact on PV upstream materials supplies will therefore be small.Digitimes Research estimates that global supplies of polysilicon for PV use will total 160,000-170,000 tons in 2011. Although there is currently a severe shortfall in raw materials supplies for PV polysilicon, the earthquake in Japan is likely to have only a limited effect on this issue.PV polysilicon wafer capacity located within Japan totaled some 1,360MWp in 2010, accounting for just 5% of global capacity. Besides M. Setek, all the relevant factories are located in the Kansai area, where the impact of the earthquake has been limited. Consequently, only M. Setek's 120MW crystal cutting production capacity has been affected, and this is not likely to have an impact upon global supplies of PV silicon wafers.Japan has a significant influence on the key components and materials sectors globally, while the PV module materials sector is led by firms hailing from Europe, North America and Japan.Rapid growth in the PV market during 2010 resulted in insufficient supplies of PV-grade EVA for PV module encapsulation, and a large number of Japan-based manufacturers subsequently switched their conventional EVA capacity over to the production of PV-grade EVA. The main Japan-based manufacturers in this sector are Mitsui Chemicals and Sumitomo Chemical. Mitsui Chemicals has a PV EVA production capacity of 20,000 tons, while Sumitomo Chemical operates an EVA production line in Chiba Prefecture with a capacity of 30,000 tons. Global demand for PV-grade EVA is approximately 170,000 tons, and so shortages of PV-grade EVA will continue as long as new capacity is limited. If regional electricity rationing continues, PV EVA supplies may well become even more thinly stretched.Japan's Hitachi Cable occupies a leading position in the PV ribbon sector. The firm's main factory sites are located in Ibaraki Prefecture, part of the main disaster area. This will put further pressure on the already limited supply of PV ribbons. Japan-based polysilicon suppliers Company Plant location in Japan Capacity (ton) Product line Tokuyama Yamaguchi 8,200 Semiconductor, PV Mitsubishi Materials Mie 4,300 Semiconductor Osaka Titanium Hyogo 1,400 Semiconductor M. Setek Fukushima, Miyagi 7,000 PV Source: Digitimes Research, March 2011 Japan-based solar wafer suppliers Company Plant location in Japan Capacity (MWp) Space Energy Corp Nagano 210 Kyocera Shiga 400 Sumco Saga 630 M. Setek Fukushima, Miyagi 120 Source: Digitimes Research, March 2011 Japan-based PV module material suppliers Material Company Plant location Capacity (ton) EVA Mitsui Chemicals Aichi 20,000 Ibaraki 5,200 Bridgestone Shizuoka 50,000 Gifu 28,000 Sumitomo Chemical Chiba 30,000 PV ribbon Hitachi Cable Ibaraki 700 Source: Digitimes Research, March 2011

The earthquake offshore of Japan should have little impact on the wireless communications industry because, unlike in semiconductors and panels, Japan-based companies do not play a major role in this market.From a wide area network (WAN) stand point, though Japan's telecom service has the highest market penetration in the world, shipments of telecom equipment is still far behind the big three of Ericsson, Nokia-Siemens Networks and Huawei.As for wireless local area network (WLAN), the wireless chip sector is dominated by US companies such as Broadcom and Qualcomm. The two companies combine for more than 60% of the global Wi-Fi chip shipments. Their Japanese counterparts consist of a much smaller share.

The PC component supply chain has been little affected by the earthquake-tsunami that hit Japan on March 11, as component makers have moved most of their production to China along with PC makers.Only a small portion of PC-use print circuited board (PCB) and passive component production remains in northeastern Japan, the area hit hardest by the disaster.But northeastern Japan is the hub of the country's automotive production, with over 171 related players located there. Therefore, supply of automotive electronic components will feel more impact of the disaster. Japan-based automotive companies' plants and status after earthquake Player Major products Plant location in Japan Earthquake impact Toyota Car assembly, car battery Miyagi and Iwate Both plants were shut down. The plants mainly houses assembly lines for Central and Corolla cars for the US market. The Iwate plant also produces battery for HV car. Honda Car assembly, car electronics Sayama, Ogawa, Suzuka and Hamamatsu, The plants were all shut down until March 14. Nissan Car electronics Tochigi, Yokohama, Iwaki, Oppama and Zama The plants were all shut down until March 14. Ahresty Car electronics Tochigi and Yamagata Temporarily shut down Suzuki Car assembly Six plants including those in Takatsuka, Kosai and Iwata The plants were all shut down until March 15 Source: Digitimes Research, March 2011

Media outlets worldwide are offering advice on various ways readers can provide support to the growing crisis in Japan. The New York Times, Wall Street Journal and Yahoo have provided contact information and links to several established agencies, such as The Red Cross, Doctors Without Borders and Save The Children that are planning to provide relief services to Japan.Other sites such as Network For Good provide tools for users to donate to their charity of choice, while some bloggers are offering advice on some alternative methods of giving, such as by using text messages or iTunes.The media is also warning people to be careful and make sure they donate to a legitimate organization. According to one article, although you can count on the generosity of people when a natural disaster occurs, you can also count on plenty of scam artists looking to take advantage of that generosity.

Production of Japan-based major LCD TV vendors such as Sony, Toshiba, Panasonic and Sharp will not be significantly affected by the 9.0 magnitude earthquake and tsunami that struck off the northeast coast of Japan on March 11, as their TV assembly plants are not located in the disaster areas. The four Japan-based vendors are expected to account for 35.6% of the global LCD TV market in 2011.In terms of upstream component supply, Sony and Toshiba mainly adopt in-house image processing chips for their high-end models. Sony's production plant for image processing chip is located in Nagasaki, which was not significantly affected by the disaster. Meanwhile, Toshiba's image processing chip plant was more seriously damaged compared to its IC chip production plant.Digitimes Research believes that with for mid-range to entry-level LCD TV models, which Japan vendors mainly outsource to overseas manufacturers, image processing chips will not be an issue.For other components, the disaster will affect some supply of TAC and color filters. Liquid crystal supplier Chisso, which accounts for 20-30% of the global market, will see some of its shipments affected due to a fire at a nearby oil refinery plant. With Hitachi Chemical and Sony accounting for 90% of ACF supply worldwide, significant impact on the global LCD display industry is expected.Overall, as Japan-based LCD TV vendors all run overseas production plants and will outsource over 70% of their production in 2011, Digitimes Research expects Japan vendors to shift more of their production to overseas plants or further increase outsourcing if the rolling black-outs hinder their production in Japan.Tokyo Electric Power Company (TEPCO) started rolling black-outs on March 15 due to power shortages in the wake of the disaster. TEPCO has separated Tokyo, Chiba, Kanagawa, Saitama, Ibaraki, Shizuoka, Tochigi, Gunma and Yamanashi prefectures into five sections, and each section takes turns to have power cut for three hours. The rolling black-outs is expected to continue until the end of April. Part of the power of TEPCO is supplied by the Fukushima Daiichi nuclear power plant, which was seriously damaged by the tsunami caused by the earthquake. In addition to TEPCO, Tohoku Electric Power has also started rolling black-outs and is expected to continue for a month.SonyPlants in the Miyagi prefecture were suspended either due to tsunami or power outage caused by the earthquake. The plants in Miyagi are mainly for optical film, magnetic tape and magnetic head production.Equipment at the Kanuma plant in Tochigi prefecture was not damaged by the disaster but suspended operation due to lack of power in the disaster area. The Inazawa TV assembly plant in Aichi prefecture is far away from the disaster area and was not affected by the earthquake.TV chip (Bravia engine) production is located in Nagasaki, far away from the disaster area and production has not been affected.ToshibaToshiba announced on March 15 to suspend production at its TV production plant in Saitama prefecture in response to the rolling black-outs. Several production and semiconductor facilities in Kanagawa prefecture will also suspend production in response to the rolling black-outs.Its production plant in Iwate prefecture was hit by power outage and damage to factory buildings. The plant regained partial power supply on March 13, but operation remains suspended. The plant is mainly for CCD, CMOS and image processing analog IC production.Production of LSI logic circuit and analog IC in Oita prefecture is far away from the disaster area and has not been affected.PanasonicAlthough no one is allowed to enter its Sendai and Fukushima plants due to aftershocks, the damage will not affect Panasonic's TV business as the Sendai and Fukushima plants mainly focus on networking business.Its Utsunomiya plant was not damaged by the earthquake but is within the rolling black-out area and will suspend production in response to the rolling black-outs. The Utsunomiya plant is mainly for image and display business.SharpThe Yaita plant in Tochigi prefecture was suspended until March 14, and is facing rolling black-outs after resuming operation. The Yaita plant is mainly for small- to medium-size TV assembly business.With the Kameyama and Sakai plants being far away from the disaster area, neither the earthquake nor the following rolling black-outs have any impact to their production. The Kameyama plant is a TV assembly plant, and the one at Sakai is for LCD panel production. Impacts of the March 11 earthquake on the supply chain of Japan's LCD TV vendors Vendor TV assembly plants Image processing chip LCD panel Other components Sony Located in Aichi prefecture; unaffected by the quake Sony and Toshiba mainly adopt in-house produced image processing chips for high-end TV models. Sony's image processing chip plant in Nagasaki unaffected by the quake. Toshiba's image processing chip production plant damaged. Only Panasonic's 6G plant impacted by quake Some impact on TAC and color filter supply. Fire at nearby oil refinery affecting liquid crystal supply from Chisso. Significant impact on global ACF supply expected. Toshiba Plant in Saitama prefecture in rolling black-out zone Panasonic Utsunomiya plant in rolling black-out zone Sharp Production at Yaita plant in Tochigi prefecture suspended till March 14; affected by rolling black-outs. Kameyama plant unaffected by the earthquake or rolling black-outs Source: Companies, compiled by Digitimes, March 2011 Nikkei: Sales ratio of TEPCO by industry Total power per hour Industry Ratio 82.6 million kilowatt Food 7% Paper 3% Railway 8% Chemical 12% Non-ferrous metals 5% Steel 9% Machinery (including automobiles) 22% Others 34% Source: Nikkei, compiled by Digitimes, March 2011 Global assembly plants of Japan-based TV vendors Vendor Asia Europe America Sharp China, Japan, Malaysia Poland, Spain Mexico Sony China, Japan, Malaysia - Brazil Panasonic China, Japan, Malaysia, India Czech Republic, Russia Mexico, Brazil Toshiba China, Japan, Indonesia Poland Mexico Source: Companies, compiled by Digitimes, March 2011Source: Digitimes Research, March 2011

In the wake of the devastating earthquake and tsunami that hit Japan, possible shortages of notebook-use lithium batteries are a concern for the PC sector although global demand for notebooks is currently low due to seasonality.All of Sony's lithium battery cell plants are in the disaster areas. The plants may have been affected, but if materials supply remains smooth, there should not a major problem for Sony's lithium battery cell production.But supply of materials is indeed a major concern as Japan account for over 50% of global lithium battery materials' production value.Hitachi Chemical, which has 50% of the anode market, runs its plants in or near the disaster zones.Furukawa Electric, which produces electrolytic copper foil for batteries and has over 55% global market share, also runs all its plants in or near the disaster areas.Mitsubishi Chemical, which produces electrolyte composition for batteries and has about 20-25% global market share, has about 20% of its capacity from the quake-affected areas.Therefore, Digitimes Research believes that notebook battery supply may be affected in the next few months. Japan-based notebook component makers' plants and status after earthquake Maker Major products Plant location in Japan Impact Sony Battery cell, IC card Two plants in Fukushima The two plants mainly produce battery cells; PC shipments may be affected TDK PC components 13 plants; locations included Akita, Yamagata, Iwate and Ibaraki Shut down due to power cut policy; related supply may be affected Furukawa Electrolytic copper foil Plants located in Tochigi, Japan with monthly capacity of 500 tons All plants are located in disaster zones; 70% of the capacity caters to PC and handset segments Mitsubishi Chem Electrolyte Plants located in Mie, Japan with annual capacity of 8,000 tons (including plants in the UK and US) N/A Electrolyte composition Plants in Ibaraki with annual capacity of 2,000 tons The plants are located in or near disaster zones JX Nippon Mining & Metals Cathode material Plants in Ibaraki with annual capacity of 500 tons The plants are located in or near disaster zones Hitachi Chem Anode material Plants in Ibaraki with annual capacity of 8,000 tons The plants are located in or near disaster zones Source: Digitimes Research, March 2011Source: Digitimes Research, March 2011

AU Optronics (AUO) may see faster progress in its TFT-LCD panel mass production in China than its Korea-based competitors, as the government in Taiwan has lifted all restrictions on its companies acquiring or investing in China-based LCD panel makers.The main reason for the Taiwan government to lift all restrictions on panel investment in China is to improve Taiwan's competitiveness in the global TFT-LCD panel market and to create greater revenues for Taiwan's TFT-LCD industry.With the Korea government having allowed its panel makers to invest in China without any restrictions, the Taiwan government's previous restrictions set a huge obstacle to Taiwan panel makers' development in China. But the change of policy means that Taiwan panel makers may now build their own plants in China or invest in the country's existing makers.China's National Development and Reform Commission (NDRC) so far has only approved applications for 7.5G and more advanced plants from BOE, China Star OptoELectronics Technology (CSOT) and Infovision Optelectronics Kunshan.Digitimes Research believes AUO is looking to acquire or invest in Infovision. If it cannot work out a deal to acquire or invest in Infovision, AUO will need to apply to the NDRC for approval of a plan to set up its own 7.5G plant in Kunshan, China.Meanwhile, Korea-based panel makers have turned conservative about investing in China, as both Samsung Electronics and LG Display made losses for their TFT-LCD panel businesses, and may delay mass production in China - currently scheduled for the first half of 2012.With Korea-based panel makers now placing more emphasis on AMOLED, Digitimes Research believes that China investment will not be the focus of their capex for 2011.Therefore, with their higher market share in China in 2010 and better relationship with China-based TV vendors, AUO and Chimei Innolux (CMI) may be able to start volume production of LCD panels in China earlier than their Korea-based rivals, further strengthen vertical integration, and enhance their competitiveness in the flat-panel display market in China.Source: Digitimes Research, March 2011

South Korea's LED supply chain relies on Japan's Kyocera and Namiki for sapphire substrates, and Nichia and Toyoda Gosei for epitaxial wafers, chip packaging and LED phosphor materials.Among the Japan-based companies, Namiki was hit the hardest by the recent earthquake offshore of Japan. Nichia and Toyoda Gosei were relatively unscathed.In sapphire substrates, South Korea's Sapphire Technology Company (STC) and Astek already have ingot production and slicing capability. Iljin Display and Hansol Technics (formerly Hansol LCD) also have ingot slicing operations. With Hansol Technics and LG Siltron expanding to upstream sapphire substrates since 2010, South Korea has become less reliant on overseas supply sources. Hence Namiki's production disruption should have little impact on South Korea's LED industry.Additionally, as STC now has the world's largest capacity for LED-use sapphire substrates, Namiki's share of the South Korea LED market has been down for quite some time.As for MOCVD equipment, South Korea LED chipmakers mainly rely on Germany's Aixtron and US-based Veeco, and hence, the earthquake has not affected equipment supply to the country. From epitaxial wafers to chip packaging, South Korea has sufficient capacity within the country, plus Nichia and Toyoda Gosei sustained only minor damages.However, South Korea still needs to improve its own capacity in phosphor material production. Though, as mentioned, Nichia and Toyoda did not sustain serious damages, shipments from Japan to South Korea could be impacted by air and sea traffic delays. Overseas and domestic suppliers of South Korea LED supply chain South Korea Overseas MOCVD equipment AP System, Top Engineering, Juseng Engineering Aixtron, Veeco Phosphor materials Force4, Daejoo Electronic Materials Nichia, Toyoda Gosei, Osram Sapphire substrates STC, Astek, Iljin Display, Hansol Technics Rubicon, Monocrystal, Kyocera, Namiki Epitaxial wafers Samsung LED, LG Innotek, Seoul Optodevice, EpiValley Nichia, Toyoda Gosei, Cree, Osram, Philips Lumileds, Epistar LED chip Samsung LED, LG Innotek, Seoul Optodevice, EpiValley Nichia, Toyoda Gosei, Cree, Osram, Philips Lumileds, Epistar Chip packaging Samsung LED, LG Innotek, Seoul Semiconductor, Alti-Electronics Nichia, Toyoda Gosei, Cree, Osram, Philips Lumileds Source: Companies, compiled by Digitimes, March 2011

Areas affected by Japan's March 11 earthquake, aftershocks and the quake-triggered tsunamis include the prefectures of Fukushima, Miyagi, Aomori, Yamagata, Iwate and Akita.Not to mention its focus on the development of agriculture and tourism, northeast Japan is also considered one of the nation's major manufacturing locations. Several of Japan's major semiconductor companies locate their manufacturing spots in the northeast prefectures, for example, Toshiba's 8-inch wafer fab in Iwate, Renesas Electronics' factories in Aomori, Hokkaido and Yamagata, Elpida Memory's backend manufacturing facility in Akita and Fujitsu's plants in Fukushima.Disruptions in transportation and power infrastructure will inevitably have a certain degree of impact on chip companies. Moreover, there is also concern about supply constraints for upstream materials.With its major production hub in Nishigo Village of Fukushima, a prefecture close to the epicenter of the earthquake, Shin-Etsu Handotai (SEH) is expected to suffer significantly from the impact. SEH is still unable to disclose when normal operations at the facilities can be resumed.SEH's Shirakawa plant, Fukushima Prefecture, produced about 22% of total silicon wafer demand in the world in 2010. Monthly capacity at the plant reaches as high as 800,000 12-inch wafers, accounting for more than 60% of SEH's overall production capacity of 1.2 million units.Many chipmakers have claimed that they are capable of activating alternatives if necessary. In addition, wafer inventory among companies remains at a sufficient level of two to three months. However, if SEH's supplies cannot return to normal over a longer period of time, the semiconductor market will struggle with wafer shortage issues later in the year.In 2010, Japan's semiconductor industry generated sales of US$44.6 billion, up 16.4% from 2009 levels. The growth also represented a recovery for the sector following two years of sales drops. Japan accounted for 15.9% of total semiconductor revenues worldwide in 2010, compared to 16.9% in 2009 and 19.5% in 2008. Japan top-5 semiconductor companies: Revenues and worldwide ranking, 2009-2010 (US$m) 2010 Japan rank Company 2010 revenues 2009 revenues Y/Y 2010 WW rank 2009 WW rank 1 Toshiba 13,081 10,319 26.8% 3 3 2 Renesas 11,840 5,153 129.8% 5 9 3 Elpida 5,678 3,948 74.2% 10 15 4 Sony 5,336 4,468 19.4% 14 10 5 Panasonic 5,128 3,243 58.1% 15 18 Source: Digitimes Research, compiled by Digitimes, March 2011Source: Digitimes Research, compiled by Digitimes, March 2011Source: Digitimes Research, compiled by Digitimes, March 2011

LED players in Japan have been spared major impacts from the March 11 massive earthquake and tsunami that hit the country, as their plants are mostly far away from the stricken areas. With Japan not having a high market share in the LED industry, the global LED supply chain is not expected to be much affected, according to Digitimes Research.Japan-based players whose plants did feel some impact from the quake include Taiyo Nippon Sanso, Namiki Precision Jewel, Showa Denko and Citizen Electronics.Taiyo Nippon Sanso, which produces MOCVD machinery, only had a 2.5% share of the global market in 2010, and therefore any possible impact on its production would have little effect on the global MOCVD supply, Digitimes Research said.Sapphire suppliers Kyocera and Namiki are expected to have a combined global market share of 15.4% in 2011. Kyocera's plants were only rocked mildly by the quake, while Namiki was only affected by power outages with its facilities all remaining intact.Global sapphire supply is unlikely to see major impacts, but prices may stop falling, Digitimes Research said. Japan LED supply chain Sector Company Quake impact MOCVD Taiyo Nippon Sanso Only had 2.5% of global market in 2010 Sapphire Kyocera Sapphire facilities not affected; ranked 5th globally Namiki Affected by power outage; facilities intact; ranked 6th globally LED chip Nichia Facilities far from quake areas; supply unlikely to be affected Toyoda Gosei Facilities far from quake areas; supply unlikely to be affected Showa Denko Facilities near quake areas, but not hit with power outage; it only supplies to specific clients Citizen Electronics Facilities near quake areas; affected by power outage Source: Digitimes Research, March 11Source: Digitimes Research, March 2011Source: Digitimes Research, March 2011Source: Digitimes Research, March 2011