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

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