Impact of Japan quake on IT supplies continues to grow
Parts shortages, increased prices could be most acute in three months
- By Kathleen Hickey
- Mar 23, 2011
Japan’s recent environmental disasters – a large-scale earthquake and ensuing tsunami, followed by concerns over nuclear plant meltdowns – are causing electronics shortages and increased prices on components such as chips, flat-panel displays and other components for computers, cameras and tablet PCs.
The extent of the situation is unknown, as companies have released little information on disruptions, reported the New York Times. There is also no timetable for when electric power and infrastructure problems will be resolved, further adding to the situation.
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Japan is a major supplier of electronics components, with Toshiba producing roughly one-third of the world’s chips, the Times reported. Toshiba, Sony, Canon, Hitachi, Sanyo Electric and Fujitsu have closed factories and are still evaluating the extent of the damage, including damage to nearby roads, railroads and ports.
Hewlett-Packard, Lenovo and Apple, which rely on parts supplied by Japanese manufacturers, will also be affected. Even if a plant is operational, rolling blackouts are limiting manufacturers’ abilities to keep up with demand.
"Though production has increasingly been outsourced to China, South Korea and other lower-cost markets, there are over 40 factories in Japan producing a significant proportion of the world's PC and smart-phone components," Tim Coulling, PC analyst at Canalys, told Reuters.
Ocean carriers have canceled and rerouted shipments to Japan, further reducing the country’s ability to move goods and increasing transportation costs, reported the Journal of Commerce. Cargoes that would typically go by ocean are shifting to air due to damaged and closed ports; however, there is limited airplane cargo space due to flight reductions and reduced plane weight limits as a result of the need to carry extra jet fuel, also leading to increased costs, the JOC reported.
Ripples from the disaster are already being felt in other countries, including China and Taiwan, reported the Times and JOC. Global mining company Rio Tinto reported the disruptions posed a threat to its expansion plans, Reuters reported.
Supply shortages will likely be most acute in three months, Malcolm Penn, CEO of research firm Future Horizons, said in a BBC story.
"This will start to bite home in a few weeks' time when the first shortages start to appear and hit hard even further in about three months' time when the production that isn't being made today should have been coming online," he told the BBC.
Kathleen Hickey is a freelance writer for GCN.