Earthquake Impacts Automotive Supply in Japan: HIS iSuppli

Taipei, March 28, 2011 (CENS)--The March 11 earthquake and tsunami have disrupted the entire automotive industry supply chain in Japan, according to HIS iSuppli.

Japan in 2010 accounted for 35% of the US$31.5 billion global automotive infotainment segment, during which the country produced US$11 billion of infotainment electronics, said Hitomi Larson, automotive researcher at IHS.

Japanese manufacturers in 2010 were responsible for 32% of the US$22.9 billion global market for automotive semiconductors, with the country's automotive chip production totaling US$7.3 billion.

Key automotive components produced in the disaster-affected area in Japan include semiconductors, liquid crystal displays (LCD) and optical sensors.

Chip suppliers are expected to encounter difficulties in obtaining and distributing raw materials and product delivery, which will disrupt automotive semiconductor supplies from Japan in the following weeks, HIS iSuppli said, if not months, particularly if suppliers rely on single sources.

Northeastern Japan, the worst-hit area, is also home to many semiconductor wafer fabrication facilities, including Renesas Electronics, Texas Instruments (TI), Freescale Semiconductor and Fujitsuto.

Tier-1 automotive infotainment electronics suppliers in Japan have reported varying quake impacts, whose total fallout is unclear given that many of these companies also have plants in Mexico and elsewhere.

Production facilities that depend upon a steady supply of components—especially microelectronics devices—would experience material and/or component shortages of varying degrees, the global major research firm said.

A number of sources said that in many cases inventory can make up for immediate component needs and that most suppliers have a good understanding of how long it will take before they run out of parts.

Japan's automakers have stopped production at several plants to conserve the region's power.

The research firm concluded that for non-Japanese automotive OEMs, the impact of the earthquake on supply chains could be delayed, as Tier-1 manufacturers assess their supplier situations.