Japan quake sends tremors across global supply chain

The 9 magnitude temblor which hit Japan on Friday sent tremors across the global supply chain as companies dependent on Japanese exports fretted over supply disruptions.

The World trade Organization's (WTO) International Trade Statistics 2010 places Japan in the fourth position as the largest exporter in the world with $581 billion in exports which translates to 4.6 percent of world exports in 2009. Thus Japan is pretty well entrenched in the global supply chain exporting products like steel, semiconductors and cars.

Computerworld reported that Japan supplies about 40 percent of the world's flash memory chips. Toshiba is a key supplier of flash memory to Apple. Also IDG News Service reported that Sumco Corporation and Shin-Etsu Chemical which supply most of the world silicon wafers have stopped production.

DigiTimes reported that Japanese suppliers of key materials like BT resin, rolled copper foil and ACF (anisotropic conductive film) which are used in the production of core smartphone components have temporarily stopped taking orders and shipments.

Fears have been exacerbated on reports of rationing of power in Japan as the earthquake knocked down 11 nuclear reactors in Japan. Nuclear power generates 24 percent of Japan's domestic electricity.

Reuters reported that Toyota Motor Corp. has deferred production at all factories in Japan until March 16 which will result in an output loss of 40,000 units. Honda Motor Corp. has suspended production at all facilities until March 20 which would result in a loss of 4,000 vehicles a day. Nissan Motor Corp. has suspended production in two plants until March 18 and in the remaining four plants until March 16.

WSJ reported that Mazda Motor Corp. had suspended all domestic operations until March 20.

Also Nippon Steel Corporation, which had stopped production at its Kamaishi plant in northern Japan, restarted three blast furnaces at its major Kimitsu factory in Chiba.

Key importers of Japanese products are China, US, EU, South Korea and Taiwan. Japanese merchandise exports to China total to $110 billion, $95 billion to US, $72 billion to EU, $46 billion to South Korea and $35 billion to Taiwan.

Toronto Star reported Canon, the world's largest maker of cameras, suspended operations at facilities in Japan. Nikon halted production at its Miyagi facility. Toshiba halted production in five plants, Fujitsu in 10 plants and Sony stopped production in eight plants.