Rolling blackouts, tsunami damage try Japanese companies

Rolling blackouts in eastern Japan will likely cause some supply issues

A day after Japan's biggest earthquake ever caused widespread destruction and as-yet uncounted deaths, Japan's biggest electronics companies are trying to ensure that employees in disaster areas are safe and facilities remain intact.

The threat of meltdowns at two nuclear power plants remains, while fires continue to rage in some areas and fields and roadways are clogged by sea water from a deadly tsunami that washed away entire towns.

Government estimates of the dead and missing currently top 1,000, but local news sources say as many as 10,000 people from one town may have been swept out to sea by the tsunami, which struck after Japan's 8.9-magnitude earthquake.

One of the biggest problems companies now face is power shortages caused by damage from the tsunami. People and companies are being told to expect rolling blackouts as officials work to get power plants back online.

Water is another concern. Fears of shortages prompted the government to ask people to conserve water as well as electricity.

The worst physical damage from the earthquake, which caused skyscrapers over a hundred miles away in Tokyo to sway dangerously, came from tsunami floodwaters shortly after the earthquake struck on Friday afternoon.

Sony, for example, spent Saturday airlifting emergency supplies by helicopter to hundreds of employees stuck at a Blu-ray disc factory in Miyagi prefecture, Japan.

The tsunami struck just after 1,000 workers at the factory moved to the second floor, stranding them there overnight. The Miyagi facility is one of six plants Sony shuttered after the earthquake, but the only one the company believes sustained extensive damage.

Sony "has not suffered major damage except for that (Miyagi) factory," said George Boyd, a Sony representative, though he added that it's hard to judge the overall impact of the earthquake so soon. Some of Sony's plants, including a battery facility and a chip factory, remain down due to the power outages.

Tokyo Electric Power Company, which covers Tokyo and a number of other areas east of Japan's capital, has said residents should expect power shortages because the earthquake and resulting tsunami damaged some power stations and caused others to shut down.

One of the most serious problems the company faces is at two nuclear power plants in Fukushima prefecture. The company said an explosion at the Fukushima Daiichi Nuclear Power Station Unit 1 caused by an aftershock sent four workers to the hospital. The company is still assessing damage to the facility, it said in a statement, while local news reports indicate the reactor remains intact, and that outer buildings were damaged by the blow.

"We are presently checking on the site situation of each plant and effect of discharged radioactive materials," the company said.

Japanese DRAM maker Elpida Memory says the earthquake and tsunami had little impact on its operations because they're so far away from the temblor. Elpida's main chip factories are in Hiroshima, in the western part of Japan, while the earthquake's epicenter was in the northeast.

The earthquake "had very little impact. No wafers were scrapped and the operation has been back to normal," said Kumi Higuchi, a representative from Elpida.

She said one factory, Akita Elpida, used to test finished chips for defects and package them inside protective material, is being affected by blackouts. However, Elpida doesn't believe this will impact its operations because most of its chips are sent to Taiwan for testing and packaging.

SanDisk, which partners with Toshiba in a few joint venture chip manufacturing plants in Japan, said both of its factories were down for a short period of time on Friday due to the earthquake, but were already back up and running later the same day.

The company noted that the factories are 500 miles away from the epicenter and said "there has been minimal immediate impact on wafer output due to the earthquake."

Toshiba could not immediately be reached for comment.

The company is one of the world's largest suppliers of flash memory, with an extensive network of chip factories in Japan. The company's flash memory chips are the main storage chips inside Apple's iPad 2, according to iFixit, which did a teardown of the device and found 16GB NAND Flash from Toshiba inside.

Jim Handy from industry research firm Objective Analysis, estimates that Japan supplies 40 percent of the world's NAND flash memory and that the earthquake will cause "phenomenal price swings and large near-term shortages."

"It doesn't take a large production decrease to cause prices to increase dramatically," he noted.

Another major electronic component potentially impacted by the earthquake was LCDs.

Japan is no longer a major producer of LCD panels, though it still accounted for over 6 percent of the global supply last year, but it does sell a large share of components used in LCD panels, including glass, color filters, polarizers and LEDs, according the IHS iSuppli, the market research company.

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Tags sonytoshibaJapanComponentsElpida MemoryEarthquakeJapan earthquake

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Dan Nystedt

IDG News Service
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