Japanese electronic components maker Mitsubishi Gas Chemical has been unable to operate plants in Fukushima and Ibaraki prefectures since the massive earthquake last Friday. MGC produces bismaleimide triazine resin, a key material in manufacturing smartphones and tablet PCs and accounts for 50 percent of the global market for the product.
The company supplies half of the bismaleimide triazine resin to iPad and iPhone manufacturers in Taiwan and China. Andrew Lu, an analyst at Barclays Capital in Hong Kong, said if MGC stops supply for two or three months, smartphone and tablet PC makers will face parts shortages.
◆ Delay for Next iPad
A week since the devastating earthquake in Japan a sense of crisis has gripped the industry. There are fears that Apple may suffer a setback to sales of the new iPad2, of which more than a million units have already been sold. U.S. IT industry magazine Computerworld reported since the company has ample stocks there will be no immediate impact, but there could be shortfall in two or three months. Apple's share price plunged 4.5 percent on Wednesday.
MGC is not the only iPad components maker to suffer damage in the earthquake. Toshiba (memory chips), Seiko Holdings (batteries), Asahi Glass (LCD panel glass) and Murata Manufacturing (semiconductors for communications devices) have either temporarily halted operations or have been unable to restart them.
◆ Global Parts Shortage
Other IT companies are also biting their nails. A Sony Ericsson staffer said the company expects the earthquake to impact parts supply.
Most global IT companies have a three-tiered supply network. Japan supplies the materials and core components, Taiwanese and Korean companies import them and turn them into intermediate goods, and manufacturers in China and Korea assemble them into finished products. So if problems arise at Japanese parts and materials makers, the global supply network could end up falling apart.
Taiwanese components makers are especially worried since they are more dependent on Japanese imports than Korea. The Taiwanese government is considering lowering tariffs on Japanese components imports in anticipation of a parts shortage.
According to the Wall Street Journal, U.S. and European IT companies like Nokia, which are heavily dependent on Japanese components, are busy assessing the damage to their suppliers. Even American automakers are worried about a shortage in computer chip supplies, because U.S. chipmakers like Freescale Semiconductor and Texas Instrument have plants in Japan for part supply.
Korean companies say they have not been immediately affected yet. "We have around one or two months worth of inventory and have made contingency plans to import parts from other manufacturers," a Samsung Electronics staffer said.
But the situation will change if the crisis in Japan drags on, because the output of components makers is limited. Wafer makers are already facing difficulties since Samsung Electronics and Hynix have ramped up orders for products to beef up their inventory.