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UPDATE: Japan's Earthquake & Tsunami Leave Disaster in Wake – Some Initial Reports


Information continues to come in from Japan as Saturday's sunrise allows for more news coverage of the state of both human, economic, and industrial losses (cf. BBC, Financial Times, and New York Times for some continuous coverage sources).

Numerous communities were washed completely away by the tsunami in the northeastern region, particularly around the port city of Sendai.  The tsunami was between 20-33 ft high and moved at roughly 500mph.  Government officials are now estimating the human losses to reach over 1,000.

Early Saturday morning, aftershocks continued to hit northern and northeastern Japan, and another earthquake in the north was registered.

Of great concern to Japan are infrastructure, transportation and water systems.  But the most grave and pressing problem is Japan's oldest nuclear power plant which has lost emergency diesel power to take over cooling processes.  There is concern as to how this situation will resolve.  Some releases at the nuclear power plant have happened to relieve pressure; and evacuations have been conducted in a 1km radius.  Radiation levels continue to rise but not yet considered dangerous levels to people nor the environment.  There are four reactors under careful watch presently (cf. this Wall Street Journal report for one discussion).

Japan's government and electrical power system officials have requested that industrial clients limit or shut down their plants in order to redirect power to residences and to aide in the rescue, clean up and emergency uses.  One affected semiconductor company is Freescale Semiconductor Inc.'s microcontroller production facility in Sendai, one of the hardest hit port cities in northeastern Japan and near the epicenter.  Because of the lack of power to many facilities, such as Freescale's, the ability to accurately assess damage and forecast impacts and return schedules is delayed until power is resumed (cf. this article).

Not only damage to factories, fabs, and manufacturing facilities but also the ability to come back on-line to even assess damage is in question presently.  The initial power failures and continued loss of power, on top of the grave logistical and transportation problems, will have dramatic impacts on semiconductor supply chains (see this report on initial trouble to supply chains such as ours).  Even those factories and fabs not located near the impacted areas are likely to face logistical problems getting their goods in and out of Japan due to the severe infrastructure problems resulting from the earthquake and tsunami (cf. the same report).

One ongoing concern is the effect on NAND flash becuase of the large percentage of manufacturing of NAND flash in Japan.  While both Toshiba and SanDisk are still evaluating their situations at this time, their factories are well outside of the hardest hit areas (see this update).  However, the power fluctuations and loss are not insignificant factors. 

Multiple sectors within our industry are impacted (e.g., glass substrates, fabs, assemblies, and various manufacturing and end-product lines).  (cf. this article for an initial overview.)  One analyst, Jim Suva, provided the following update pertaining to Corning and related glass production in Japan (Citi Global Research "GLW: Big Earthquake In Japan" Friday, 3/11/11):

1) Glass production can be severely impacted by natural disasters and importantly its more than physical damage to buildings but also remember its power supply, transportation, shipping logistics, worker impact, etc. 2) If a glass plant experiences damage and/or glass production gets turned off, it typically takes approximately one quarter to get glass production and yields back online. 3) Natural disasters typically result in short term firmer glass and panel pricing if there is any impact to the industry so investors need to consider all sites and the supply chain impact. 4) If the damage is widespread impact to large populations, TV sales could see some softness as funds gets shifted to clean up and rebuilding rather than discretionary uses.

There are also initial reports in from telecom operators that undersea lines have been damaged.  Initial news of the status of some major businesses in Japan are coming in, as compiled in this report by Bloomberg.

An excerpt of major companies' status from the Bloomberg report follows:

Company                     Status
Sony Corp.                   Production halted at six plants
Toyota Motor Corp.       Three group factories halted
Canon Inc.                   No damage affecting production reported
Nippon Telegraph &       Restricted calls to some areas
Telephone Corp.            including Tokyo
Nissan Motor Co.           Halted production at four plants; two injuries
Honda Motor Co.           Halted two plants; one employee killed; about 30 injured
Toyota Boshoku Corp.   Damage at plant in Miyagi
Seiko Epson Corp.         Gathering information
Panasonic Corp.            Assessing damage, several workers with minor injuries
Oriental Land Co.          Will close Tokyo Disney Resort tomorrow for inspections
Denso Corp.                 Damage to plant under construction in Fukushima
Asahi Breweries Ltd.      Assessing damage
Kirin Holdings Co.          No major damage reported
Sapporo Holdings Ltd.    Damage at Sendai and Chiba plants
Sharp Corp.                  Assessing damage
East Japan Railway Co.  Halted train services in Tokyo area
Tokyo Metro Co.            Halted train services
Tokyo Electron Ltd.        No immediate reports of damage
NTT DoCoMo Inc.          Mobile-phone service disruptions
Softbank Corp.              Mobile-phone service disruptions
Fuji Heavy Industries     Five plants halted


We at Smith MarketWatch will continue to monitor the situation throughout the weekend and provide relevant industry updates as reliable data and forecasts are compiled.

Lisa Ann Cairns, Ph.D.
Written on Friday, 11 March 2011 22:35 by Lisa Ann Cairns, Ph.D.

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