Supply concerns grow as Japan lacks parts, power

Topdawg13 · Mar 19, 2011

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From Apple Inc's new iPad to Chevrolet pick-ups, concern is spreading down the global manufacturing supply chain about the impact of Japan's earthquake last week.

Even where factories in Japan are operating, power outages, shortages of fuel and raw materials and ruptured logistics mean products and parts face delays in getting to customers.

Japan's grip on the global electronics supply chain is causing particular concern. The world's third-biggest economy exported 7.2 trillion yen ($91.3 billion) worth of electronic parts last year, according to Mirae Asset Securities.

"Should the Japan crisis be prolonged, I expect a shortage of electronic parts in the second quarter," said James Song, an analyst at Daewoo Securities, noting Japan provides 57 percent of the world's wafers, used to make the chips that go into mobiles phones, cameras and other electronic devices.

Goldman Sachs warned of potential bottlenecks in the supply of silicon wafers, conductive film used in LCD circuits and resin used to connect chips to boards -- products made by Japanese companies such as Shin Etsu and divisions of Sony, Hitachi and Mitsubishi.

Airline industry body IATA said Japan produces 3 to 4 percent of global jet fuel supply and warned part of this capacity had been lost. "This supply restriction could lead to higher jet fuel prices," it said.

Lufthansa Cargo, which moves electronics, liquid crystals for flat screen displays and pharmaceuticals out of Japan, said it may be forced to cancel some flights next week.

Denmark's Novo Nordisk, the world's biggest insulin producer, has suffered disruption at its Koriyama plant, where only 10 percent of the normal 100-strong workforce are still on site. Novo said it was continuing to ship insulin from Koriyama and distribution centres were well stocked.
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