Global supply chain rattled by Japan quake, tsunami

Global companies from semiconductor makers to shipbuilders faced disruptions to operations after the earthquake and tsunami in Japan destroyed vital infrastructure and knocked out factories producing everything from high-tech components to steel.

 

 

Thousands of people have been killed and millions have been left without water, electricity, homes or heat after Friday's 8.9 magnitude quake triggered a massive tsunami which tore across a wide swathe of coastline north of Tokyo.

 

The earthquake has forced many firms to suspend production and shares in some of Japan's biggest companies tumbled on Monday, with Toyota Corp (7203.T) and Sony Corp (6758.T) falling 8 percent and 9 percent, respectively.

 

With initial damage assessments still being made, companies and analysts said it was too early to accurately gauge how long disruptions might last.

 

"It will take quite some time until investors' confidence in Japanese manufacturers returns. When we look back at the Kobe earthquake, it took about a week to get an overall picture of the magnitude of the damage," said Toshihiko Matsuno, senior strategist at SMBC Friend Securities, referring to the 1995 earthquake that killed more than 6,400 people.

 

"At this point, it's absolutely unclear how the power cut will affect manufacturers' production and businesses. "

 

Rolling power blackouts are likely to affect Tokyo and surrounding areas over the next few weeks, adding to the existing challenge of inspecting and repairing north Japan plants amid continuing aftershocks and the threat of major radiation leaks from damaged nuclear power plants.

 

KOREAN COMPANIES HIT

 

Japan is a major electronics manufacturer, accounting for 14 percent of the global production of computers, consumer electronics and communications gear last year, according to research consultancy IHS iSuppli.

 

Companies in neighboring South Korea, which depend heavily on Japan supplies such as LCD glass, chip equipment, silicon wafers and other products to produce semiconductors, were some of the most affected.

 

Hynix Semiconductor (000660.KS), the world's No.2 memory chipmaker and a rival of Japan's quake-hit Toshiba Corp (6502.T) and Elpida Memory (6665.T), said it was concerned the quake may weaken consumer demand further and disrupt supplies of chip components.

 

"It could give a boost to battered chip prices but that's a short-term impact from disrupted supplies by Japanese companies," said Kim Min-chul, chief financial officer at Hynix. "Longer-term we are more concerned about the quake reducing overall consumer demand and disrupting supplies of chip components and equipment, which could interrupt our production as well."

 

Hynix shares surged almost 9 percent on expectations of a short-term boost to chip prices, while shares in Toshiba, a conglomerate whose products include semiconductors and nuclear reactors, dived 16 percent.

 

Toshiba, which supplies more than a third of the NAND memory chips used worldwide in devices such as Apple's (AAPL.O) hot-selling iPad, said it was starting the process of restarting a chip factory in Iwate, northern Japan.

 

Japan's Shin-Etsu (4063.T), the world's top producer of silicon wafers used to make semiconductors and the plastic PVC, suspended operations at its Shirakawa plant over the weekend.