Japan Quake A Risk For Electronics Industry

The magnitude 8.9 earthquake that hit Japan on Friday, devastating cities and killing hundreds, could create a serious dent in electronics supply chains.

With the world's third largest economy, Japan remains a major producer of electronics despite China's gains over the last decade. According to IHS iSuppli, Japan accounted for almost 14 percent of global electronic equipment factory revenue last year. The country accounts for 16.5 percent of that revenue in the consumer electronics industry.

Fifth in the world for semiconductor production, Japan's current crisis will have significant effects on electronics supply chains. Of the 300 semiconductor companies tracked by IHS iSuppli, 39 of them are located in Japan. Japan also has a significant stake in the large size LCDs, accounting for 6.2 percent of the market, IHS iSuppli said. Sony, Toshiba, Kyocera, and Canon, are among the many industry heavyweights in the industry headquartered in Japan.

Japan is also a significant center for production of NAND flash, the central components of USB storage devices and solid state drives. Forty percent of the world's NAND flash comes from Japan, according to Objective Analysis Market Research. The firm believes that, until damage from the earthquake is fixed, semiconductor consumption will come to a standstill.

Disasters like Japan's earthquake and subsequent tsunami also have significant effects on air travel and ocean shipping, delaying product shipments and harming the country's economy. Much of Japan's postwar transformation into an economic power was driven by its electronics and auto industries, both of which are heavily export-oriented.

To contact the reporter responsible for this story call (646) 461 7294 or email r.bilton@ibtimes.com.