Japan’s Quake May Disrupt Chip Shipments

As companies in Japan begin to dig out from the damage done by the largest earthquake the island nation has ever experienced, analysts are already assessing the impacts it may have on the country’s technology industry.

The 8.9 magnitude quake that struck Friday had its epicenter some 231 miles northeast of Tokyo off the coast of the main island of Honshu, according to a report from the U.S. Geological Survey (USGS). It struck just before 3 p.m. local time.

The violent shaking and several tsunamis that followed the quake wreaked major destruction, although little about the status of technology businesses and other technology infrastructure is yet known.

At least two analyst firms, however, suggest the disaster could cause significant supply chain problems for manufacturers of tech products globally.

“Japanese suppliers accounted for more than one fifth of global semiconductor production in 2010,” according to a news flash from IHS iSuppli, following the quake. The research firm also said that DRAM manufacturing in Japan accounts for 10 percent of the worldwide supply based on wafer production.

However, iSuppli said, little damage has been reported as of yet as far as manufacturing facilities like wafer fabs are concerned. Due to the nation’s history of major quakes, building standards are much more stringent than in most of the world.

Another analyst firm, Objective Analysis, also issued a flash regarding Japan’s importance to the technology economy and its early prognostications regarding the quake’s impact.

“Over 40 percent of the world’s NAND flash and roughly 15 percent of the world’s DRAM are manufactured in Japan [and] Japan is a significant source of chips to support consumer electronics devices,” said Objective Analysis.

While not projecting any hold ups due to damaged manufacturing or engineering facilities, the damage done to infrastructure like roads and utilities, could cause manufacturers in Japan to shut down for two weeks or more, the company said. That could cost big time.

“A two-week shutdown would remove from production a sizable share of each of these [NANDs and DRAMs]. It doesn’t take a large production decrease to cause prices to increase dramatically,” Objective Analysis added.

Meanwhile, at least some technology firms with facilities in Japan, including Microsoft, are already working to restore services.

“Microsoft has a disaster response cloud based communications portal, based on Windows Azure, available that governments/NGOs can use to communicate with citizens or intra-agency for information, situational awareness and communication purposes,” Microsoft said in an email to InternetNews.

“We do know at this time that there is no disruption to Microsoft’s cloud-based and hosted services,” Microsoft added.

The software giant said it’s also providing free incident support to aid customers and partners in getting their operations back up and running.

Stuart J. Johnston is a contributing editor at InternetNews.com, the news service of Internet.com, the network for technology professionals. Follow him on Twitter @stuartj1000.

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