Prolonged Supply Chain Instability Expected in Semiconductors and Autos Following Kumamoto Earthquake

Projections indicate that supply chain instability sparked in the semiconductor and automotive-related industries in Kumamoto due to the strong earthquake that struck on the 28th could last for at least several months.

According to Japanese media reports on the 30th, TSMC, the world's largest contract chipmaker (foundry), stated yesterday that it will take some time to resume operations at its Fab 1 located in Kikuyo, Kumamoto Prefecture.

Earlier, the plant evacuated employees outdoors immediately after the strong earthquake on the 28th, allowed them to return after confirming the structural safety of the building, and is currently conducting a detailed investigation into the earthquake's impact.

While TSMC confirmed the structural safety of Fab 1 and verified that there are no issues with water and power supplies, it is known to take the stance that re-checking and adjusting manufacturing equipment are necessary given the strong shaking from the earthquake.

TSMC resumed construction on its Fab 2 plant on the 29th, which had been temporarily suspended due to concerns over aftershocks.

Sony Semiconductor Manufacturing, which produces image sensors, has halted operations at its core production base, the Kumamoto Technology Center, built near TSMC's Kumamoto plant immediately following the strong earthquake and is assessing the earthquake damage.

During the 2016 Kumamoto earthquake, it took the company three months just to fully resume its processes.

The Sony Kumamoto Technology Center originally operated its production lines around the clock without interruption.

However, it is reported that no decision has been made yet on when to resume operations that were halted following the strong earthquake.

Renesas Electronics, an automotive microcontroller (MCU) manufacturer, is also inspecting its Kawashiri plant.

There is a precedent where the global finished car industry was forced to cut production due to a shortage of automotive semiconductors after this company stopped production due to damage from the 2011 Great East Japan Earthquake.

The Nikkei (Nihon Keizai Shimbun) projected that even if semiconductor companies in the Kumamoto region, including TSMC, successfully restore their production processes early, it will still take several more months to resume shipments and normalize production.

This is because, due to the nature of semiconductor manufacturing where micro-circuits are formed through hundreds of processes, considerable time is required for complete inspections, and if even the slightest flaw is found in the finished product, it is discarded.

The Nikkei pointed out that in addition to the damage suffered in their own processes by the semiconductor manufacturing industry in the region, supply chain instability could further intensify due to earthquake damage inflicted on logistics and transportation infrastructure.

According to Japan's Ministry of Land, Infrastructure, Transport and Tourism, soil liquefaction and subsidence were observed after the earthquake at the Yatsushiro Port in Yatsushiro City, which suffered heavy damage in the latest strong earthquake, leaving it in a situation where time is needed to normalize port operations.

As this port is known to be the only one in the southern part of Kyushu capable of handling hazardous materials such as high-pressure gases and chemical solutions for semiconductor materials, which are essential for semiconductor manufacturing, the semiconductor industry's attention is expected to focus on the timing of the port's normalization.

The Kumamoto strong earthquake is also impacting the automotive industry's supply chain, with Toyota Motor, the world's largest automaker, halting operations at its three plants located in Fukuoka Prefecture near Kumamoto Prefecture until tomorrow night.

Aisin Kyushu, a parts supplier affiliated with Toyota Motor, also temporarily suspended operations; when this company stopped operations due to the 2016 Kumamoto earthquake, 90 percent of Toyota's finished vehicle production lines in Japan were brought to a standstill.

Aisin stated that the impact of this Kumamoto strong earthquake on its processes was greater than that of previous earthquakes, adding that it is still difficult to predict the schedule for normalizing production.
 
(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.