Japan: Earthquake Interrupts Electronics Supply Chain

The collateral damage from last month’s massive earthquake and tsunami in Japan is now extending to the electronics industry.

U.S.-based research firm IHS iSuppli said Friday the disasters had led to the “most significant” disruption ever to the industry’s supply chain.

Japanese manufacturers are key sources for a number of components used to produce things like LCD screens, cars and smart phones. Japanese factories produce all kinds of things from the silicon wafers that become computer chips to the hydrogen peroxide — or bleach — used for cleaning.

But factories in Japan have been struggling to get back to work after the March 11 earthquake and tsunami and as the country endeavors to repair a damaged, radiation-leaking nuclear power plant.

In addition to physical damage, the manufacturers also are facing power outages. IHS iSuppli research director Dale Ford says it will take two or three months to get most factories back to full production. But he says it may take some up to six months, and others may be too damaged to ever get back on line.

That means that factories elsewhere in the world are not getting their usual deliveries from Japan. And the lack of any single component — even bleach — can bring production to a complete halt.

Some industries have enough stock on hand that they can weather a shortage for the next few months. But Ford says the industry most vulnerable to the supply disruption is the automotive industry. His prediction may have already proven true — Japanese automaker Honda announced Wednesday it is slowing down production at its North American plants to conserve dwindling supplies.