March 22, 2012 — Japan’s limited presence in the display manufacturing industry, as well as higher-than-usual inventory levels at panel makers, made the March 2011 8.9-magnitude earthquake in Japan a minor event for the liquid crystal display (LCD) panel and components industries, shows the IHS iSuppli Display Materials & Systems. Japan accounts for less than 10% of the world’s LCD TV production as well.
Only 5% of large-sized LCD panel manufacturing capacity and 18% of small- and medium-sized LCD manufacturing capacity was located in Japan in Q3 2011 (see figure). The disruptions to Japan’s manufacturing and shipments had only a minor impact on the global LCD market, said Sweta Dash, director of LCD research at IHS.
| Sales, large displays | Sales, small- and medium- size displays |
|||
| China | 10% | China | 4% | |
| Japan | 5% | Japan | 18% | |
| Korea | 45% | Korea | 23% | |
| Taiwan | 40% | Taiwan | 55% | |
| Singapore | 0% | |||
 |
| Figure. Percentage of global large-sized and small- and medium-sized LCD panel manufacturing by region. |
Panasonic, Hitachi and NEC were the only three panel suppliers with fabs impacted by proximity to the earthquake’s epicenter. Sharp’s Gen8 and Gen10 fabs were not impacted at all.
For facilities that suffered minor impairment from the quake, production resumed by the end of March and April; other facilities that suffered more substantial damage resumed production by the May or June time frame. Some facilities also were impacted by power shortages or rolling blackouts due to the shortages, but by summer these were significantly reduced.
On the LCD component side, the biggest worry was anisotropic conductive film (ACF) and indium tin oxide (ITO) material supplies, due to Japanese dominance in the supply chain. Although LCD component supply was affected, panel vendors already had 4-8 weeks of inventory in stock, which helped to ride out shortages in supply. Hitachi and Sony Chemical control 80% of ACF material supply. They were able to restart production by the end of March. JX Nippon, Mitsui and Tosoh together accounted for 80% of ITO materials. JX Nippon’s facilities were impacted by the earthquake, but some production had resumed by April and full production was restored by June. Suppliers with 4-8 weeks of component inventories to use felt very little impact from the disruption. For many components, other suppliers also increased their production.
Other component shortages — such as in bismaleimide-triazine-resin (BT resin), hard drives and batteries — also upset panel demand by impacting the production of notebooks, tablets or other consumer electronic products. For BT resin, Mitsubishi Gas Chemical Co. Inc. held a 50% share, while Hitachi Chemical had a 40% share of supply. By April, one month after the tragedy, Mitsubishi Gas had recovered 25%. Hitachi Chemical had resumed production on March 17, 2011, but power outage issues continued for some time, and a full recovery didn’t come until the second half of 2011. Meanwhile, other companies in Taiwan, South Korea and China geared up to develop BT resin materials, reducing the impact of the shortage.
Before the quake there already had been an inventory buildup of panels and television sets in the channel, which also reduced any potential negative consequence due to supply disruptions. Among those companies with TV production facilities in Japan — Panasonic, Sony, Sharp and Toshiba — only Panasonic sources the majority of its LCD TV products from Japan. Sony produces only a very small percentage of its TVs in the country. Even before the disaster, most Japanese-branded manufacturers already had established production facilities outside the country in places like China, Malaysia, Brazil, Poland and Mexico. Many Japanese TV manufacturers also have decided to increase their outsourcing of TV production to ODMs since then.
Other microelectronics sectors:
MEMS supply chain stronger 1 year after Japanese earthquake
How Toshiba’s NAND biz survived Japan’s Great East Earthquake 1 year ago
Automotive MEMS grew 16% in 2011
Japan’s aging semiconductor industry revealed by 2011 earthquake
IHS (NYSE: IHS) provides information, insight and analytics in critical areas that shape today’s business landscape. Learn more at www.ihs.com.