TOKYO –
The magnitude 7-level earthquake that struck Kumamoto Prefecture on July 28 has disrupted operations at semiconductor-related services throughout one among Japan’s most vital chipmaking facilities, elevating issues about doable delays in tools shipments and their affect on the worldwide business.
Taiwan Semiconductor Manufacturing Co. and Sony Group briefly evacuated workers from factories and manufacturing websites following the quake, whereas Tokyo Electron suspended operations at two manufacturing bases to conduct security inspections.
Satoshi Oyama, president of semiconductor consultancy Grossberg, mentioned many semiconductor firms function services in Kumamoto, however comparatively few manufacture merchandise that may solely be made within the prefecture.
Renesas Electronics produces microcontrollers and different merchandise within the space, which means some disruption is feasible. However, Oyama mentioned his biggest concern was Tokyo Electron’s semiconductor manufacturing tools plant.
The facility produces coaters and builders, tools used within the semiconductor fabrication course of. Tokyo Electron holds greater than 90% of the worldwide marketplace for such methods, with its share approaching 100% for tools utilized in probably the most superior chipmaking processes, in line with Oyama.
Any extended disruption to shipments of coaters and builders from Kumamoto may due to this fact have a serious impact on the semiconductor business.
A scarcity of the tools wouldn’t instantly halt current chip manufacturing in the identical means {that a} scarcity of uncooked supplies would possibly. The better concern is that semiconductor producers looking for to develop capability may face delays in putting in manufacturing strains and rising output.
Oyama mentioned circumstances differ sharply from these in the course of the Kumamoto earthquakes 10 years in the past, when the semiconductor market was weak. At that point, some services had been reportedly disrupted for about one month.
The international semiconductor business is now experiencing robust demand, with main producers ready for tools deliveries from Tokyo Electron and different suppliers. An analogous monthlong delay at present may have a lot better penalties than it did a decade in the past.
Demand for cutting-edge chips has elevated significantly quickly due to synthetic intelligence, making the tools produced at Tokyo Electron’s Kumamoto services extra vital than ever.
Tokyo Electron is scheduled to announce its earnings for the April-June quarter on July 31, and a spotlight is anticipated to give attention to any feedback regarding the earthquake. However, it stays unsure whether or not the corporate can have accomplished an in depth evaluation of the injury by then.
Safety inspections at semiconductor services can take appreciable time as a result of precision tools should be checked rigorously earlier than manufacturing resumes.
Oyama, who skilled three main earthquakes whereas working at a Fujitsu manufacturing facility in Iwate Prefecture, mentioned producers refine their restoration procedures after every catastrophe. Plants usually get well extra rapidly from a second earthquake than from the primary, and sooner nonetheless after a 3rd, as a result of detailed manuals and response methods have been developed.
Japan’s frequent earthquakes have pressured firms to undertake catastrophe preparations which can be among the many most superior on the planet, he mentioned.
The quake has additionally prompted questions on whether or not semiconductor manufacturing and tools manufacturing ought to be dispersed throughout a bigger variety of places to cut back danger.
Oyama mentioned such decentralization could also be thought of for giant semiconductor fabrication vegetation, however it could be troublesome for semiconductor tools producers.
Production of semiconductor tools relies upon closely on extremely expert employees, in addition to networks of subcontractors and companion firms. Components equipped by these companies should finally be assembled and adjusted by groups of skilled technicians to supply a completed machine.
Dispersing manufacturing would require firms to ascertain separate teams of expert employees at a number of places, making such a method inefficient and troublesome to implement.
Oyama additionally rejected the view that the earthquake would reverse the focus of semiconductor funding in Kumamoto, the place TSMC has established manufacturing operations as Japan seeks to strengthen its chip provide chain following the shortages skilled in the course of the coronavirus pandemic.
He mentioned the continued improvement of Kumamoto as a semiconductor hub was unlikely to be shaken by the catastrophe.
Taiwan can be extremely earthquake-prone, whereas Japan stays one of many world’s most fitted international locations for semiconductor manufacturing due to its industrial base, technical experience and catastrophe preparedness.
Oyama mentioned abroad firms had been unlikely to conclude that Japan was too harmful and transfer manufacturing elsewhere just because earthquakes happen.
TSMC and different producers are increasing within the United States, partly as a result of lots of their prospects are primarily based there. However, manufacturing within the United States faces excessive labor prices and difficulties in recruiting course of engineers and manufacturing facility operators.
Such employees and the industries that help semiconductor manufacturing are concentrated primarily in Japan, South Korea, China, Taiwan and different components of Asia.
China faces political tensions with Western international locations, whereas Taiwan and South Korea are additionally seen as carrying geopolitical dangers. Against that background, Japan is more and more thought to be one of the crucial reliable places in Asia for semiconductor manufacturing.
Japan additionally has a broad community of semiconductor producers, supplies suppliers and tools makers. Although earthquakes are frequent, firms have developed intensive countermeasures, whereas labor prices stay comparatively low in contrast with the United States.
Taken collectively, these components are more likely to maintain abroad producers’ curiosity in increasing manufacturing in Japan reasonably than drive them away, Oyama mentioned.
The earthquake is however anticipated to bolster the significance of enterprise continuity planning, together with measures to guard provide chains and restore operations rapidly after pure disasters.
Source: テレ東BIZ