Electronics Vulnerable to Disruptions in Asia
The major disruption to the global electronics supply chain caused by the Japan earthquake could recur in other regions of Asia, said Dale Ford, chief analyst at IHS iSuppli.
“The disaster in Japan has exposed how the focus of electronics manufacturing in a single country can massively impact the highly interconnected global technology industry,” said Ford. “Because of this, it’s worthwhile to consider what could happen if a production disruption were to strike other key electronics production regions where manufacturing is highly concentrated. These regions include Taiwan, South Korea and certain areas of China. As we move forward, the global electronic industry will have to learn how to manage potential disruptions in various regions.”
Potential Taiwan impact
Taiwan accounts for 67 percent of global foundry production. Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and United Microelectronics Corp. (UMC) play a pivotal role in the global chip supply chain. Worldwide, there are more than 150 fabless semiconductor companies using foundry services, representing more than $30 billion in annual revenue, IHS iSuppli reported.
Some of Taiwan’s other major contributions to the global electronics supply include:
- 24 percent of total semiconductors
- 37 percent of display drivers
- 58 percent of small/medium-sized liquid crystal display (LCD) panels
- 34 percent of large-sized LCD panels
Potential South Korean impact
South Korea presents a particular concern since so much manufacturing is concentrated in a specific location: the Seoul metropolitan area. “Nearly half of all global production of DRAM occurs in the Seoul area,” observed Mike Howard, principal analyst for DRAM and memory at IHS. “If manufacturing were to be disrupted by some event occurring in this small geographic area, the impact on the global electronics supply chain would be devastating.”
Nearly 40 percent of the world’s DRAM capacity is located near the city: Seoul is home to Samsung Electronics Co. Ltd. and Hynix Semiconductor Inc., another dominant player in the DRAM industry.
A look at South Korea’s overall contribution to global electronics production shows:
- 59 percent of DRAM
- 49 percent of NAND flash
- 27 percent of display driver semiconductors
- 51 percent of large-sized LCD panels
- 18 percent of small/medium LCD panels
China syndrome
China is home to most of the world’s original design manufacturing (ODM); much of this manufacturing is concentrated in the Shanghai and Shenzhen metropolitan areas. Four out of five mobile PCs are produced in the Shanghai area, while one-quarter of cell phones are made in Shenzhen, the market research firm noted.
