By David Lammers
Shortages of wafers, chemicals, and other essential semiconductor-manufacturing materials are likely to persist if Japan’s power-generation capabilities remain impaired, IHS iSuppli analysts said Friday (April 1).
Analyst Len Jelinek said “the most overwhelming issue we’ve run into is the issue of power. If rolling brownouts continue for suppliers such as Shin Etsu Handotai (SEH), the impact of the quake will continue longer than expected,” he said.
Source: IHS iSuppli
“At this point, TEPCO (Tokyo Electric Power Co.) is not discriminating between industrial and residential customers,” Jelinek said. With TEPCO’s power generating capacity down 30 percent in the cool spring season, the hot summer may result in rolling brownouts that could impact the return to production of facilities key to the semiconductor production supply chain.
The main worry is the silicon wafer suppliers, though key chemicals are not far behind on the list of concerns. SEH has the world’s largest integrated wafer manufacturing facility in the quake-affected region, and two other major suppliers of wafers also are being impacted. SEH performs the entire wafer manufacturing cycle — from crystal growth through final epitaxial deposition — at its Kamisu and Nishigo facilities. Together, they account for 20 percent of the world’s 300-mm wafer supply.
The wafer-production process requires a clean, uninterrupted supply of power to operate, and any power outages could result in a shortage. “Supplies may be tight,” Jelinek said, adding that “other wafer suppliers are ramping as hard as they can. Customers are scrambling right now to qualify their suppliers.” Most chip manufacturers have a three to four week supply.
“If we run the timeline through, we can count on three to four weeks of limited production, during which companies will be able to procure additional supplies from competitors to SEH,” he said.
SUMCO, another major wafer supplier, has suffered “a minimal amount of damage” at its Yonezawa plant, and is getting ready to restart. SUMCO is shifting wafer production to other plants that were not damaged, he added.
MEMC’s Utsunomiya wafer production facility takes in ingots grown in Taiwan, slices and polishes them in Japan, and does some epitaxial deposition. “Epitaxial manufacturing requires clean power,” Jelinek said, adding that MEMCO could be “one of the key suppliers to recapture some of the lost capacity taken offline by SEH. But MEMC must have a clean, reliable power source.”
Jelinek said chemicals are another key concern, particularly BT resin production needed by the packaging sector, and hydrogen peroxide (H2O2) needed for wafer cleaning.
“The real issue is that about 60 percent of the BT resin comes from Mitsubishi Gas and Chemical’s Electrotechno facility in Fukushima. They believe they can get 25 percent of their facilities up and running in the first part of April, and be in full production in May. The customers have a few months supply, so there may be minimal impact on the BT resin supply,” he said.
The Yonezawa Daiya Electronics facility making BT resin in Yamagata is impacted by power outages, as is the Kashima Corp. facility in Ibaraki.
However, the supply of hydrogen peroxide is less assured. A Mitsubishi Gas and Chemical facility in the Fukushima region supplies roughly half of the world’s production of hydrogen peroxide. “The problem is that they need power and raw materials,” Jelinek said. Two other hydrogen peroxide manufacturers are based in Japan, which, together with the Mitsubishi facility, account for 75 percent of the world supply. Akeda-Fuji Corp. produces about 50,000 tons of H2O2 per year. Nippon Peroxide’s facility in Koriyama is out of operation currently.
The supply of hydrogen peroxide is “rapidly turning into a very concerning issue. The question is: How quickly can these Japan facilities come back online?” he said.
Dale Ford, manager of the semiconductor industry group at IHS iSuppli, said the March 11 quake has had “the biggest impact on the supply chain in the history of the electronics industry,” exceeding the 1995 Kobe earthquake and the Taiwan quake in 1999. “None of them were as broad in their impact as the effect the Japan quake has had. I would argue this is the most significant supply chain incident ever,” Ford said.