Japan takes ¥20 trillion hit as analysts warn of supply chain problems

Analysts at IHS iSuppli have warned that the earthquake and subsequent power problems in Japan could affect electronics supply chains for some time to come, especially in the telecoms and consumer electronics sectors.

The rolling blackouts and shut downs of several key nuclear power plants across Japan which followed the magnitude 9.0 earthquake near Sendai earlier this month have caused the closure of key component facilities across Japan, many of which have yet to restart production.

These included over 20 semiconductor plants as well as display, battery and silicon wafer factories, which could have a knock on effect in the production of devices such as the iPad 2. Japan accounts for around a quarter of global silicon production, for example.

In the most likely scenario the disaster is unlikely to derail the global recovery, but some industries are likely to experience significant pain as continuing power capacity problems make it hard for these factories to get back on track.

IHS iSuppli even warned that supply may fail again during the high-demand summer season, causing more problems for electronics components manufacturers.

The market watcher said that the earthquake is likely to have cost the Japanese economy more than ¥20 trillion, which amounts to about four per cent of the country's GDP, although it predicted a strong bounce back once electrical generators come back online and factories reopen.

24 Mar 2011