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Japanese Chip Shutdown Causing Shortages 121

Posted by samzenpus
from the cause-and-effect dept.
An anonymous reader writes "Japan's natural disasters and nuclear crisis have already caused silicon wafer shortages that are rippling through the global supply chain of semiconductors for everything from your garden variety PC to the biggest Google server farm. The earthquake and tsunami in Japan have shut down 25 percent of the global semiconductor raw materials production, threatening to cause shortages and price hikes in everything from smartphones to supercomputers. Intel and Qualcomm are countering that they have stockpiles and alternative manufacturing plants that can pick up the slack, but dozens of other electronics makers require critical components only manufactured in Japan."
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Japanese Chip Shutdown Causing Shortages

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  • An opportunity... (Score:5, Insightful)

    by bogaboga (793279) on Wednesday March 23, 2011 @07:32PM (#35593526)

    ...but dozens of other electronics makers require critical components only manufactured in Japan."

    What could these critical components be really? Just want to know. With this datum, can someone convince me that Japan is manufacturing these components because it's cheaper than to manufacture them in the USA?

    US based venture capitalists, step in and do something here. You will be handsomely rewarded.

    • by Winckle (870180)

      I think some manufacturing processes are kept secret and not shared with outside factories, letting those in Japan have superior methods/tech to foreign competitors.

    • by jbolden (176878)

      No there was a big fire in the only factory that made the right glue for computer memory in 1993. Prices skyrocketed for the glue but the market was soon glutted. Not enough time.

      • Re: (Score:2, Funny)

        by dgatwood (11270)

        Yeah, but for that short period of time, a bunch of manufacturers found themselves in a sticky situation.

      • by fishbowl (7759)

        Yeah that was a lot of fun, knowing that people were selling the stock of chips *they already had* at outrageously high prices. I understand about replacement cost and all that, but it really was *nuts* for a while, and that time happened to coincide with a local maximum for my own individual need for memory chips. I basically learned how to do more with less RAM and infrequent upgrades. When the bottom fell out of the chip market it kind of caught me by surprise... I needed, I guess, 128M simms or some

        • by jbolden (176878)

          I remember. I had a 386-40 (AMD) that I bought with 8m ram and had upgraded to 20m.
          I replaced it with a Pentium-60 (1st gen) with 16m.
          I think that's that was the only memory downgrade in my life in terms of systems I personally owned included when I switched to laptops.

    • A lovely thought and perfectly logical, unfortunately US companies don't see any point to making actual goods here because some reason our workers actually think the people who actually do work are worth almost 1% of those who manage and market. Thus we have to export manufacturing to the countries that will pay their workers $5 a week or less.
      • by EvilIdler (21087) on Thursday March 24, 2011 @04:10AM (#35596028)

        Japan isn't a third-world nation, though. Wages there are actually pretty high: http://www.worldsalaries.org/japan.shtml [worldsalaries.org]

        I would think chip factory workers are in the $2000-$3000 per month range, but I have no data on that. Seems right when you compare all the sectors, though. Japan is about as expensive as a North European country, with wages to match. $20 per month would be unsustainable and illegal ;)

        Maybe it's because Japan is in the middle of the world? About as far east and west, and close to China/Taiwan, where they take chips and make motherboards and other things from them. Also centrally located for distribution (and incidentally much cheaper, not adding so much overhead once final products are built).

        • by Dogtanian (588974)

          Maybe it's because Japan is in the middle of the world?

          Let me guess, you have one of those weird-ass American maps that have the Pacific in the middle? :-)

    • by 0123456 (636235)

      What could these critical components be really? Just want to know. With this datum, can someone convince me that Japan is manufacturing these components because it's cheaper than to manufacture them in the USA?

      It's a few years since I worked for a company that made chips, but from what I remember every chip mask we used was made in Japan because they were the only country with the technology to do so. That wouldn't affect existing chips but would prevent you from making new ones.

      • by DinDaddy (1168147)

        I believe Nikon makes the optics used in the process, and they were also hit pretty hard by this, as was Panasonic.

    • These chips will be used in commercial boards and PCBs. How long do you think it'd take the company who is selling these commercial products to redesign their boards for the new chips, go through the various stages of the product life cycle and then finally start selling them?

      In that time I'm sure Japan's chip industry will be up and running again.

    • by Nocterro (648910)
      For one, the Sony CCD sensor chips [sony.net] used in many, many CCTV surveillance cameras.

      I work for an Australian CCTV wholesaler and we're already getting emails offering buying leads for alternative manufacturers (Pixim [pixim.com] for instance)

  • by Anonymous Coward

    Say Detroit. Some redundancy would be beneficial, don't you think?

    I bet there's plenty of available buildings too.

  • by haruchai (17472) on Wednesday March 23, 2011 @07:33PM (#35593552)

    Japan has been known to disaster-prone for how long exactly? And you don't have reliable alternate streams for your critical components? Cry me a fucking river - I'll sing you a sad song.

    • by camcorder (759720)
      Well, they won't actually whine but just increase the prices. At the end of the day, it's the consumers who will get affected, not the vendors. They don't need mercy of yours at all, better prepare to pay more.
      • by SomeJoel (1061138)

        Well, they won't actually whine but just increase the prices. At the end of the day, it's the consumers who will get affected, not the vendors. They don't need mercy of yours at all, better prepare to pay more.

        Actually, both consumers and vendors are affected. If your customers can no longer afford to buy your product, you'll soon be without customers.

    • by Anonymous Coward

      > dozens of other electronics makers require critical components only manufactured in Japan.

      Where exactly were they supposed to source these, again?

      • by haruchai (17472) on Wednesday March 23, 2011 @08:56PM (#35594162)

        MANUFACTURED means MADE. This isn't a natural resource; if they can make it, so can we. The fact that you allowed yourself to become dependent on a sole source goes back to - wait for it - BAD PLANNING.
        Remember how AMD got into the x86 biz? No? Go look it up.

        • by Cwix (1671282) on Wednesday March 23, 2011 @10:00PM (#35594512)

          Remember how AMD got into the x86 biz? No? Go look it up.

          Excellent suggestion, link for anyone interested.

          http://en.wikipedia.org/wiki/Amd#Processor_market_history [wikipedia.org]

          Relevant quote for those not interested. Seems like good planning on IBMs part.

          IBM wanted to use the Intel 8088 in its IBM PC, but IBM's policy at the time was to require at least two sources for its chips.

        • Wow you're like Donald Trump on slashdot. Your hugely superficial grasp of situations coupled with your ability to confidently give sweeping solutions to complex problems without even a nod to the details must make you a huge hit with management.

          MANUFACTURED means MADE. ... if they can make it, so can we.

          Jesus Christ.

          • by haruchai (17472)

            I think you must be speaking to the man in the mirror. Go back and read through my entire set of posts on the subject - slowly and carefully.
            I don't think you got past the superficial stage yourself. And, if you happen to be less popular with management than I, you should probably get tested for sociopathic tendencies.

    • by timeOday (582209)
      Yup, all those dumb consumers should have paid more for electronics to preserve diversity among producers, what were they thinking?

      Seriously, defense is probably the only industry critical enough and rich enough to even attempt [aviationweek.com] such a thing, but even they get criticized for the inefficiencies inherent in the approach, such as giving preferential treatment to small businesses, subsidizing Boeing, and so on.

      • by haruchai (17472)

        It wasn't the consumers who made the decision. We were buying stuff even when it cost much more than it does now. I remember when VCRs cost over $2000 in today's dollars. People still bought them ( just not one for each room of the house )

    • by g00ey (1494205)
      I have read that the most part (over 90%) of the semi-conductor manufacturing is located in regions of Japan that are not affected by the Tsunami. It would be interesting to know how much is really produced in Japan at all. Most things are being made in China these days.

      My suspicions are that these "shortages" are claimed in an attempt to manipulate the prices. It just like what the people at Enron did when they called up power plants and told them to shut down the electricity for a few hours every now an
  • Like the 95 Kobe quake they had when all monitor guys, including those outside of Japan, suddenly started complaining about the shortage of glass. Later turned out that there was only one fab that was affected and it was Ikegami and they were only doing one type of consumer TV tube. Keep in mind, the earthquake shut down not only supply but a great bit of demand... Cui Bono, eh?!
    • by jhoegl (638955)
      Agreed.
      In fact, wasn't there a post on Slashdot regarding the affected industry? Or maybe I heard it on the news.
      Only 4% of Japans economy was affected by the Earthquake, the rest of the country kept right on working.
      So 4% = 25% of the worlds chip makers?
      • by blair1q (305137)

        If that 4% included one of four silicon wafer manufacturers, then yes. Chip makers buy their wafers from companies that refine the sand and grow the ingots and saw the wafers from them. It's a very specialized business to make the wafers at the tolerances needed for modern chipmaking. Totally not unreasonable for a quarter of the world's capacity to be in one small area.

        • So far the only major tech companies really known to be affected are:

          Sony's camera division which has halted its assembly lines due to the rolling blackouts, it is concidering shifting production to other facilities temporarily.

          Toshiba's LSI plant is offline they hope to be back up and running in about 3 weeks, they are offline due to damaged equipment. They have switched to alternate facitiles for its small screen manufacturing and do not expect shortages.

          Canon's domestic camera production is offline due to a shortage of on hand parts but hopes to be back up and running by the end of this week.

          Nikon has 4 plants that are offline but they are for its precision equipment division its camera and consumer products plants are in Taiwan.

          Panasonic has several plants that handle optical sensors and camera gear offline in northern Japan there is no major damage but say they are waiting on infrastructure repair before resuming production.

          Renesas Electronics, has resumed operations at their biggest plant of the seven affected but another six are offline, 15 of their other plants in japan are still up and running and were not affected by the Tsunami.

          Shin-Etsu Chemical, the silicon wafer manufacturer that everyone is talking about has 2 of their plants offline but are trying to boost production at other plants to make up for any shortfalls.

  • by chill (34294) on Wednesday March 23, 2011 @07:46PM (#35593680) Journal

    Specifically, the one who pushed "Just In Time" for the manufacturer where I worked way back when.

    Me: "But what about catastrophic incidents with a supplier or entire region?"

    Consultant: "It doesn't happen like that. If one supplier goes down, we get from another. Entire sectors don't go down at once."

    After 10 years I can now call him up and say "Ha! I told you so!"

    • the entire business system of the world has been moving to 'just in time' / outsourcing, from airplanes to electronics to finance itself (mortgages).

      the claim is 'higher efficiences' and 'lower costs' (arbitrage im guessing is in there somewhere).

      when people talk about risks, they dont get listened to becasue they are basically saying 'we need to cut fewer costs' i.e. 'we need to make less short term profit'.

      in some industries, failure to be number 1 or 2 = complete and total failure, at least amongst certa

      • by Anonymous Coward on Wednesday March 23, 2011 @09:20PM (#35594296)

        Well, depending on the context, 'just-in-time' often is a good idea and does save money. Before shipping got reliable (and before http://en.wikipedia.org/wiki/Operations_research figured out the math in WW2 and beyond), you had to maintain a fairly large stockpile of input and output at every site involved in the entire chain from raw material harvesting all the way to the storefront. Gradually we've figured out how much of a supply each location really needs on hand, so we only keep that (plus maybe a few percent more as wiggle room), thus saving the cost of the extra storage space and employees. So for example, the storefront gets one truckload a week and puts most of that directly on the shelves, instead of getting four trucks at the start of every month and putting all that in a huge back room and then gradually moving it again onto shelves over the month. Plus, the shorter storage lengths are, of course, better for things that have expiration dates, like food that spoils, or high storage costs like food that needs to be refrigerated.

        In the case to the quake/tsunami, being oldschool wouldn't have really been any better; stockpiles within japan would still have been damaged, and there would still be exactly the same supply problem once the stockpiles elsewhere were used up. (Or to reword it: the gap in the supply pipeline would still be the same size, even if the pipe was longer). Note that for this tech stuff, the stockpiles are also constrained on both ends: they can't be too small, because the shipment takes a long time to arrive from japan; but they can't be too large because the tech changes quickly, so having a large stockpile would mean starting your own production late, and then been stuck holding obsolete parts when it's time to start making the next new thing. (Or another reword: when the tech moves fast, any stockpile's value depreciates very quickly).

        • it's like the difference between having unbuffered video stream and a buffered video stream on your youtube video.

          if its unbuffered, you might get interruptions and hiccups in delivery, which destroy the experience.

          if you have buffering, it costs more resources, more memory, more code, etc, but you are guaranteed less interruption.

          now we are talking about big industries instead of a video on youtube, so people feel the impact harder, and if it is the food pipleine, people will start rioting in the street.

          ma

    • by tlhIngan (30335)

      Specifically, the one who pushed "Just In Time" for the manufacturer where I worked way back when.

      I believe the originator of the JIT system is... Japan!

      I'm not sure exactly how they compensate for the disasters in the model, but many modern business methods have come out of there, including the Toyota system...

    • When you are dealing with products that face planned obsolescence in one year or less like cars and consumer electronics you need to plan for just in time unless you want to send huge swats of your production directly to the landfill.

    • Yeah. JIT works for screws and bolts but not for non-commodities.

    • by jd2112 (1535857) on Wednesday March 23, 2011 @10:11PM (#35594562)
      And he will point out that the cost savings from the past ten years of Just In Time offset any losses due to the situation in Japan and other catastrophies many times over.
  • by Dachannien (617929) on Wednesday March 23, 2011 @07:51PM (#35593716)

    See, this shows how the US has things figured out. If we have a catastrophic natural disaster in the US, we won't run into this problem, because we were smart enough to make sure that we don't manufacture anything here.

    • by Dunark (621237)

      If we have a catastrophic natural disaster in the US, we won't run into this problem

      That doesn't work because we have catastrophic artificial problems.

    • by mbkennel (97636)

      Lean Manufacturing Secrets of the Secret Haitian Masters!

    • This is a funny comment. But I think some of these funny comments that are modded up would help one get you elected into a political office. I think the best BSers on Slashdot should run for office.

    • Actually, if say California was hit by a massive 9.0 earth quake, the RIAA and MPAA would suddenly be without any new productions, and they'd have to settle for compilations, reruns and rereleases ....

      Wait ...

      • I promise you and this will sound cruel, there would be people willing to die to ensure no RIAA people escape the building as it collapses. Thats how bad its gotten.
      • Joke's on you: both are headquartered in DC!

        • by rubycodez (864176)
          so now you have me thinking about a tsunami giving D.C. an enema while the rest of the country blocks the highways to make sure no one escapes. win / win, no downside!
  • by peter303 (12292) on Wednesday March 23, 2011 @08:12PM (#35593860)
    Taiwan manufactured some crucial part of DRAM then. So when factories closed for four months after a large 1998 quake, DRAM prices actually increased the following two years.
    • by grapeape (137008)

      Didn't that also result in a bunch of lawsuits over collusion though? Thats where the whole RAMBUS debacle started if I remember correctly.

      • by Bacon Bits (926911) on Wednesday March 23, 2011 @11:44PM (#35595082)

        No, RAMBUS was a patent protected monopoly. They didn't license the technology cheaply (or broadly enough) and so prices were high for it due to low supply and high demand (it was Intel's only memory platform for a couple years). Rambus failed because they sucked at basic economics.

        The DRAM collusion investigations involved Hynix, Infineon, Samsung, Micron, and Elpida. Rambus actually has lawsuits against those companies alleging that they colluded to drive the price of Synchronous DRAM down and thus drive Intel back to SDRAM. I'm not sure how that works, because the US DoJ fined the above companies ~$700 million for colluding to keep prices high.

  • Is this similar to the bogus announcements of oil shortages caused by the gulf spill to raise prices at the pump (when it wasn't true -- shortly
    after a oil&media induced buying spree on a price run-up, prices dropped severely as there there was no shortage, and everyone had run on gas to buy it up before it 'ran out' -- it did (at the high prices), was replaced by gas costing 30% less...*cough*...

    Chips, made in Japan? How many US suppliers get them from Japan and not China or such? I'm sure there are

  • Last week when the story was posted of "US Alarmed Over Japan's Nuclear Crisis" - http://hardware.slashdot.org/story/11/03/17/0343230/US-Alarmed-Over-Japans-Nuclear-Crisis [slashdot.org] - I was marked down as "0 - Troll" for saying "Given Japan's position as the third biggest economy in the world and the amount that they produce which is exported to the rest of the world, as well as their technological knowledge, I think we should all be massively concerned about the impact that will be had on the rest of the world..."

  • It made it sound like there was chip failure everywhere, as machines were not functioning because of faulty chips designed and sent out from japan, due to the nuclear crisis.....then i reread what they were saying in the description, and wow, talk about misleading your readers.
    Sure there will be shortages of stuff from japan fro a while, they are still dealing with a massive disaster, would you expect haiti to send you out all your clothing goods you got made over there, if half the country is still living

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