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Tangible Market Effects: Auto industry already enduring after shocks

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As the industry dust continues to settle in the aftermath of the Japan earthquake, tsunami and continued electrical shortages and outages, we are beginning to see some supply chain impacts, though more time will clarify the longer-term effects.  No wait is needed for the automotive semiconductor sector though.

Because Japan accounts "for 35 percent of the $31.5 billion worldwide automotive infotainment electronics market," according to this iSuppli report, the industrial losses suffered during and since the disasters have significantly reduced the available supply for global auto makers, particularly for single source parts.

 

The sophistication and still newer market arena for MEMS means that suppliers are fewer in number.  As a result, some automotive MEMS components are single- or primarily sourced from Japan, resulting in a crippling supply problem that has already lead to a few major automotive OEMs halting or slowing production at facilities in the US and Europe (e.g., airflow sensors from Hitachi comprise 60% of global supply, see this EETimes article).

These immediate supply chain effects for auto semi are expected to continue and heighten during April.  Improvement is not expected until some of the critical suppliers resume regular production and/or alternate supply sources are secured; many estimates look to April or May for supply resumption.

The positive outlook for a relatively quick rebound is echoed in today's (4-1-11) DigiTimes report on the effect of the Japan earthquake on the MEMS supply chain:

Digitimes Research believes that the impact on the overall MEMS supply chain may not be serious, as the components that may be in tight supply from Japan are not as crucial as accelerometers, gyroscopes and microphones.  They bring added-value to end products, but they are not essential features.

Presently, there is still quite a bit of noise in the channel as to the actual mid- and long-term effects of the multi-layered disasters in Japan that continue to impact the semiconductor supply chain.  Automotive semi was certainly the first sector to be significantly impacted by the supply chain disruptions, but again, how long and how far reaching the disruption will be is still in flux. 

In sum, the forecast is that some after-market parts may be scarce, but while April inventory will be noticably low or unavailable, the duration of the shortage is not expected to be that "dramatic" and only believed to affect some options for new purchases (especially for the Toyota Prius), as discussed in this Seeking Alpha forecast.


Lisa Ann Cairns, Ph.D.
Written on Friday, 01 April 2011 13:16 by Lisa Ann Cairns, Ph.D.

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