Shortages and price hikes are inevitable. The world can no longer rely on single source semiconductor manufacturing. African nations, nations of South America and North American countries like Mexico cannot be ruled out as potential entrants and long-term suppliers. Protecting semiconductor manufacturing capabilities should be likened to oil-producing countries protecting their natural resources.
The technology sector was dealing with a chip shortage in 2010. I had attributed the projected chip shortage to the following:
- The recession resulted in reduced market demand for computers, business enterprise systems, and consumer electronics.
- Unanticipated demand for wireless smartphones.
- The recession resulted in surviving companies relying heavily on technology rather than human labor to stay competitive. This demand for technology included computers and smartphones.
Today, the entire world is dealing with the tragedy brought upon the Japanese people due to the massive earthquake and subsequent tsunami. When you combine last year’s troubles and projections with the recent earthquake and tsunami tragedy in Japan the outcome is significant with a tremendous adverse affect on regional semiconductor chip production and fabrication businesses and the global economy.
Early media reports indicated insignificant damage to semiconductor plants. However, according to recent reports from ‘The Semiconductor Industry News’ (Time, Inc.), the earthquake damaged major semiconductor plants in the region from Tohoku to northern Kanto.
This geographic region is home to the premier semiconductor fabricators in Japan’s semiconductor industry: Iwate Toshiba Electronics, Fujitsu Semiconductor’s Iwate, Akita Elpida plant, and Renesas Electronics’ Naka facility.
‘The Semiconductor Industry News’ reports Japan is the source of about 50% of the materials that go into semiconductor chips. The figure rises to 60% for LCDs.
IHS iSuppli reports Japan accounts for slightly over 20% of the world’s chip production. Japan is one of the world’s largest producer of chips.
We have a disaster looming over the technology industry.
Forget about higher prices. Think shortages.
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