Update on Japan earthquake damage : Macquarie Research

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MacqTech Express
Update on Japan earthquake damage
Event
 We update on the earthquake impact to the Japanese electronic component
supply chain following the first report Electronic components – Mostly
infrastructural impact on Monday, 14 March.

Impact
 Hirose – on track to recovery. The Tohoku Hirose (Iwate Prefecture) plant
has suffered no damage to the building and equipment and production will be
back on as soon as electricity and logistics are back on line. Koriyama Hirose
(Fukuyama Prefecture) has suffered some damage but most repairs are
almost done, and production has started with electricity and communication
recovered. Ichinoseki Hirose (Iwate Prefecture) has suffered some minor
damage and the plant is under repair. Production should start when
infrastructure is back. Of the 70 subcontract companies in the Tohoku area,
only two suppliers have suffered complete destruction and one has stopped
production due to the impact from the nuclear power plant.
 Nippon Chemi-Con – main plants are still under recovery works. 11
plants are now capable of production as of 16 March, vs only 7 on Tuesday.
But the main factories including Chemi-Con Fukushima (“mother factory”),
Takahagi plant (foil processing), Chemi-Con Miyagi, and Chemi-Con
Machinery Sendai are still under recovery. But electricity rationing and
shortage of petroleum will limit production even for plants that have
recovered.
 Alps – plants are still down. It appears that all domestic plants, with the
exception of the Nagaoka plant, are still not in operation.
 Murata – Tome Plant is still down. There is some building and equipment
damage to Tome plant (EMI filter). Electricity, water, and gas supply are still
cut.
 TDK – expect impact from power rationing. Most of the production plants
are intact with the exception of the Ibaraki plant (organic EL display) which
has suffered some damage, so we think the direct impact is not that big. But
power rationing will continue to impact production capacity. The biggest
impact is likely the furnace area of the production process.
 BT material – more clarity on Friday, 18 March. Mitsubishi Gas Chemical
indicated that there is partial damage to the Electro Techno facilities in
Fukushima Prefecture. Electricity and gas supply is now available and the
company plans to update again on Friday on the progress of the recovery.
Outlook
 Power rationing is the main lingering issue. Our impression from early this
week to the current update is that structural damage to plants and equipment
does not appear to be large, and companies are making progress in bringing
the facilities back on line. We think the direct impact on production is likely a
few weeks, not months. The lingering concern in the next few months,
however, is power rationing which is likely to disrupt production schedules and
some supply.