Tuesday, November 1, 2011


Dear Readers,

Hot on the heels of the Japan Disaster which is still impacting the supply chain in many areas, we now have a major disaster in Thailand.  The immediate and intermediate impact is limited to a few brands but those brands are definitely on our watch list of potential problem parts in the supply chain.

The list is as follows:
-          TEXAS: Expect impact from Texas from Thailand flooding. Some DC convertors lines (TPSxx and DCP01B) ; some logics lines (SN74LVxx; SN74AH)
-          ON SEMI: (ex –Sanyo sites/products mainly)  transistors (2SCxxx; 2SAxx; FWxx ; SFTxx; SOPxx) ; diodes (SBTxx; SVCxx) ;  linear (LAxx); Tantalum Cap (TBP series) , mosfet  (ECHxxx)
-          ROHM: productions sites have shut down, the first one the 8th of October the second site the 18th of October. IC’s , transistors, diodes, resistors, caps are affected but ROHM doesn't give the exact list. We have seen a lot of requirements on the resistors (MCR0x serie), sensors (BH16xx); power management Unit (BAxxx; BDxxx).
-          NEC: Tonkin  : tantalum caps  - PS/L serie (TEPSLxx/TLPSLxx) ; super caps (Electric double layer caps) series FA0, FA1, FC0, FCH, FCS, FE0, FEW, FG0, FGR, FM0, FMC, FMR, FR0, FRW, FS0, FS1, FT0, FYD, and FYH are quite short. From 1 customer we have heard that delivery could be extended to Q2 2012; the Proadlizer caps ( PF/A Series) are also affected
-          FAIRCHILD: especially the tinylogic family (NC7xxxx)
-          MICROSEMI: sensors (LX197xxx)
-          SONY: CXD family
-          LITTLEFUSE: diodes (SPxx)
-          TOSHIBA  the TLP serie (that were already affected during the earthquake) are very tight again
-          AVAGO : linear (MGA) ; diodes (HMS)

We suggest that you review your buffer stocks on the above items immediately and make sure you have product on hand, pull in product where possible, and also work with your favored Independent Distributors to shore up whatever shortages you may have after your respective reviews.

Monday, April 18, 2011

Hoovers Provides Detailed Multiple-Industry Overview of Japan Disaster Impact On Businesses

Hoovers has created a detailed initial broad overview of the impact of the Japanese quake disaster.  The number and breadth of industries affected is stunning if not daunting.  The reality is the impact will assuredly be felt for many months (at best) and most likely, years to come. 

See here for more http://www.dnbgov.com/pdf/Japan_Earthquake_and_Tsunami_Impact_Report.pdf

Wednesday, April 6, 2011

Many Optimistic Initial Reports Now Being Reversed

A number of chip manufacturers who initially were optimistic or even upbeat about their prospects of firing up production by March 23rd-30th have now either amended projections considerably to mid July+ or completely shut down their facilities as with the early closure of the Freescale plant originally scheduled for a December shutdown to an immediate shutdown http://www.evertiq.com/news/19342.

Epson has decided to shutter their crystal oscillator plant indefinitely.  Sony has shuttered 6 plants for the time being with no public projections announced for when this capacity will be fired back up (even partially).  Renesas has acknowledged significant damage to 7 or 9 plants and has yet to provide definitive restart projections http://www.evertiq.com/news/19123.

United Chemicon Group has 3 plants that are completely or partially shut down with none of them promising full production schedules for at least two more months http://www.chemi-con.co.jp/e/company/pdf/20110401-1E.pdf.  Even these projections are deemed by many to be unlikely and many if not most analysts have resigned themselves to the bleak reality that July resumption of full production to be the new best case scenario.

ANALYSIS:  Even if the July date does occur in some or even all the plants, that means that the production schedule will be behind a full four months on top of existing orders as well as coping with increasing demand combined with the seasonal bump in orders that historically happen in August and September to meet christmas manaufacturing demand.

These developments spell certain challenges for supply chain managers and directors at all levels of CEMs and OEMs.  As the picture starts to clarify that supply is crimped not by days or weeks, but rather months, there will be certain price increases as new foundries are built and existing capacity at competitor sites are stretched beyond capacity to accomodate the increasing world wide demand for electronic components and sub assemblies.

Tuesday, April 5, 2011

Infrastructure (read rolling black outs both scheduled and unscheduled) Remains the Monster Bedeviling the Japanese Supply Chain

SEMI**, defined below, is an electronics industry association who has seen fit to create a good source of updated information on the different factilities affected by the Japanese disaster which you may want to bookmark:  Known Impacts of the Japan Tohoku Earthquake/Tsunami on the Semiconductor Supply Chain

In their letter to the industry they have confirmed that the real ongoing issue is actually less the damage to plants but rather the considerable damage to infrastructure, namely the rolling blackouts.  As the summer comes the problem stands to be severely exacerbated by the heat and demands on the power grid for air conditioning and cooling...

**NOTE:  SEMI, defined as follows on its website:

Advancing Industry Growth and Profitability

The industries that comprise the microelectronics supply chain are increasingly complex, capital intensive, and interdependent. Delivering cutting-edge electronics to the marketplace requires construction of new manufacturing facilities (fabs); development of new processes, tools, materials, and manufacturing standards; policies and regulations that encourage business growth; significant investment in organizational and financial resources; and integration across all segments of the industry around the world. Addressing these needs and challenges requires organized and collective action on a global scale.
For more than 40 years, SEMI has served its members and the industries it represents through programs, initiatives, and actions designed to advance business and market growth worldwide. SEMI supports its members through a global network of offices, activities, and events in every major electronics manufacturing region around the world.  SEMI facilitates the development and growth of manufacturing regions by organizing trade missions and investment conferences, engaging governments and policy makers, fostering collaboration, providing market data, and supporting other initiatives needed to encourage investment, trade, and technology innovation.  In addition to supporting access to regional markets, SEMI helps its members explore diversified business opportunities and contributes to the growth and advance of emerging and adjacent technology markets, including photovoltaics, solid-state lighting, micro-electro mechanical systems (MEMS), printed and flexible electronics, and nano-electronics.

Monday, April 4, 2011

Raw Die Disruption in Japan Represents 25% of World Supply

Supply Chain Executives are set to see some significant challenges around Raw Die deliveries.  The brands most like to be impacted significantly are the fabless chip houses such as Xilinx, IDT, PMC Sierra, to name a few.  See here:  http://www.ocbj.com/news/2011/apr/03/companies-deal-japan-fallout-q2-impact/
There also appears to be a looming potential crisis in the supply of copper-clad laminate.  Japan produces 70% of the world's supply of this material which is used in the production of almost all PCB boards.

Many of the larger chip houses including ON Semi, TI, IBM, Renesas and others also procure a certain percentage of their die from Japanese sources outside of their own internal supply to supplement bumps in demand on certain product lines. 

Combine this crimp/shortage with robust demand across the board as the world emerges from the recession and you have a formula for price inflation as well as extended delivery times.  Critical processes to procurement planning in this environment clearly is a commitment of resources to crossing to secondary brands to supplement existing challenged primary component sources/brands.

We recommend every requirement for items affected, where possible, leave open the possibility for accepting crosses and replacement from secondary and tertiary brands.  Reviewing and shortening approvals for crosses is going to gain critical importance in the comind days, weeks, months, and maybe even quarters...

Friday, April 1, 2011

Infrastructure Challenges to Japanese Supply Chain Continues

Specifically to the electronics supply chain is a fact that will reverberate for many weeks, months, and maybe even years:  33% of the world's capacitors are manufactured in the affected regions!  See more on this and other supply facts relevant to the electronics supply chain challenges here http://www.businessweek.com/magazine/content/11_15/b4223012614574_page_2.htm.

As we mentioned in earlier blogs the continuing challenge is not getting production lines back up and able to produce but rather the infrastructure challenges associated with steady production:  electricity, gas, water, shipping logistics, and last but not least the radiation issues http://www.businessweek.com/magazine/content/11_15/b4223015043715.htm

It was estimated recently by scientists in France and the US, that the amount of radiation already released into the atmosphere and surrounding sea is 100,000 times more then what was released by the partial meltdown of three mile island in 1970 in the United States (and counting).  To be sure this alone will have lasting implications that cannot yet be fully understood, nor any projection models for productivity, account for...

Time will tell, however we human beings are remarkably resilient and the recovery in this instance will be no different.  That being said, the short to medium term implications can range from starkly bleak to overly optimistic.  The wise course is to plan for the worst (start using cross-brands where possible etc), as a back up and using regional purchasing arbitrage to average out the inevitable upwards cost pressures associated with this time period.

Monday, March 28, 2011

Ancillary Regional supply chain disruptions continue

As an adjunct to our March 23rd post here is a story on Daikin, one of two suppliers of the fluorinated ethylene propylene (FEP) used in plenum-rated cable.  In essence this company is only one of two suppliers of this material and they have basically lost half their capacity.  They have halted production, placed all existing orders on hold, and will not be updating delivery estimates until at least April 1st but most likely much longer (see http://www.cablinginstall.com/index/display/article-display/1634547980/articles/cabling-installation-maintenance/news/network-cable/cat6/2011/3/Daikin-halts-FEP-shipments-from-Japan.html?cmpid=EnlCIMMarch282011),

Also in the article there is a very interesting link to their supplier letter:  They could operate but are unable to get the water they need to do so and are unsure when they will... http://www.daikin-america.com/Files/spotlightimages/document117.pdf

This is definitely going to be the true challenge ongoing as the anectdotal information has suggested, for many of the manufacturing plants in the region for a variety of electronics related products, from coatings, chemicals, finished goods, ICs, and much more...

We suggest opening the door as much as possible in your organizations, to accepting crosses and substitutes, at least short term to mitigate against these delays which could be ongoing for days, weeks, months, and maybe even years.

Saturday, March 26, 2011

Visceral view of the true impact on the infrastructure of the region

As we mentioned in our previous post the anectdotal evidence around the lasting impact to the coastline infrastructure is becoming more clear.

Please see the attached to experience the scope of the problems facing the region http://www.abc.net.au/news/events/japan-quake-2011/beforeafter.htm...  The reality is that it will be at least 1-2 years to rebuild, thus the Japanese goverment's projection that this is a minimum 309 billion cost.

As you can see from the pictures of the power plant, the damage is extensive and there are reports of radiactive particles leaking into the water table.  The analysis will obviously be ongoing.  I will endeavor to keep you all closely posted on develpments and the impact on the supply chain.

Wednesday, March 23, 2011

Infrastructure challenges pose the biggest threat to supply chain disruptions in Japan

Anecdotal evidence has been suggesting since the March 11th earthquake struck North-eastern Japan, that there would be long-felt economic and political consequences.  Our review of the various manufacturer statuses in our previous blog hinted, both overtly and subtextually, that this was a going to be the bigger challenge.

Gas shortages, rolling power black-outs, destroyed roads and rail, water outages and more are all contributing into what it appears will be a disaster-recovery cost that is much larger then anyone expected.  Many are prognosticating that the total cost will exceed Hurricane Katrina, Andrew, and the US gulf-coast oil-spill disaster combined.

The international community will obviously feel the repercussions for many weeks, months, and in some cases, even years to come.  The question is this:  what are you and your procurement team doing to mitigate what is developing into a protracted challenge to supply chain cost and delivery structures?

http://www.inddist.com/Content.aspx?id=1305 provides a fairly clear initial financial context to judge the problem facing the region.

Part of the answer is what we like to call regional arbritrage.  PCX, Inc. over the last 17 years has cultivated many exclusive contractual relationships in regions around the world to procure product otherwise not available.  The sources include excess or overstock material from OEM, CEM, ODM and authorized distributor channels.

See our part search and try us out http://www.pcxco.com/pcxsearch.cgi to see how good we are.

Tuesday, March 22, 2011

Our deepest heartfelt condolences go out to the people of Japan following the tragic earthquake that struck northern Japan on 11th March 2011. The earthquake measured 8.9-magnitude (upgraded by some to a 9.0) on the Richter scale was determined to be the third largest earthquake in recorded history.  The death toll now stands at over 9,000 people with over 14,000 more missing and unaccounted for.  The tragedy also has caused near terminal damage to one nuclear power plant leading to severe power outages throughout northeastern Japan.

According to the ECIA aka Electronic Components Industry Association (http://www.eciaonline.org/) over two dozen board level component manufacturers and counting have suffered minor to severe damage and ongoing bouts of power, water, and gas outages.  The Denver post has an excellent ongoing general narative of the situation as it develops (http://photos.denverpost.com/mediacenter/2011/03/japan-struck-by-major-earthquake-tsunami-%E2%80%93-day-11/). 

Component Manufacturers are performing ongoing assessments of their capabilities going forward in light of the existing challenges.  The following is by no means exhaustive, however it gives a clear view of some of the individual situations as they stand today:

The situation at AVX/Kyocero has been adressed by the headquarters and for more information please click AVX.

Renesas brand product has had a mixed impact on their capabilities.  Several plants have restarted production, while some have been temporarily shuttered.  More detailed information can be garnered here CEL.

Epson has significant manufacturing assets in Japan and has shuttered at least two plants and is assessing the situation rigorously and continuously.  More information can be gathered here Epson Toyocom.

Japan represents approximately 12% of their manafacturing capacity and FCI spokespersons have provided some detailed reports here FCI.

Freescale is working feverishly to assess damage, delays, power outages and other challenges facing their Japanese production facilities and their most recent updates can be viewed here Freescale.

Fujitsu has experienced damages to buildings and production equipment including the ceilings, walls, and drain pipes of the Fujitsu Group's plants and offices have affected business operations. Furthermore, planned rotational electricity blackouts have affected operations of Fujitsu Group companies based in the Kanto region of Japan.  More information is here Fujitsu.

Hirose has suffered some slight to severe damage which as led to some delays as well as some closures.  They have 70 locale supplier plants of which two have been completely destroyed.  The assessment of impact on total operations is still in progress and more can be read here Hirose home page.

Hitachi has suffered slight to heavy damage at several facilities.  They are also assisting in the repair to the nuclear power plant and are working in conjunction with the goverment and power agencies to get those assets back on line Hitachi

Murata Electronics has suffered significant delays and damage to several product families which can be reviewed on the above link.

NEC LCD Technologies operations, deliveries, and production have been temporarily halted with restart dates uncertain.  Updates are at the above.

Though there was limited damage directly to Omron assets there are a large number of Omron suppliers in the disaster area and we are working to assess the situation. We will contact you as soon as possible if we foresee any significant impact on production or supply Omron EMC

ON Semiconductor currently owns and operates a total of three production facilities in Japan, located in Aizu, Niigata and Hanyu. Additionally, the company operates another three production facilities leased from SANYO Electric Co. Ltd located in Gunma, Gifu and Kasukawa. Initial reports indicate all six sites have sustained only minimal physical damage and remain structurally sound as a result of the earthquake and tsunami. Production has been restored at Niigata, Gifu, Kasukawa and Hanyu and was initially restored at Aizu. However, infrastructure services such as fuel, electricity, gases, water, chemicals and logistics to ON Semiconductor’s factories and those of its customers and suppliers in Japan have nevertheless been impacted by the consequences of the earthquake and tsunami. Based on currently available information, this infrastructure disruption is now expected to result in a temporary shutdown of operations at the company’s Aizu and Gunma facilities until services can be reliably restored. The potential for intermittent supply of these services may cause temporary production disruptions at other locations as well. The company currently anticipates infrastructure services will improve towards the end of the first quarter. The company is identifying options to shift production to other facilities to support supply continuity for customers.  On Semi

Like many companies Optrex suffered only moderate damages yet the ongoing logistical challenges may ultimately prove more damaging to supplying customers per normal schedules Optrex

Panasonic appears to have suffered many of the challenges associated with logistics but appears to still be in the assessment stage prior to fully disclosing the situation at its various plants and facilities Panasonic

Powerex procures much of its supply in conjunction with Mitsubishi who have clearly been significantly affected in a number of areas.  At the bottom of the CEO is also the communication from Mitsubishi CEO detailing the situation in a more detailed manner Powerex

Rohm appears to be making headway but challenges with the water supply is having a negative effect on restart projections Rohm

Sanyo appears to have been affected yet their communications are understandably vague Sanyo Denki

TDK appears to have a number of sites that are offline at the moment with projections being unclear due to the rolling black-outs and other material disruptions associated with regional infrastructure challenges TDK

TI has suffered significant damage to it's Miho plant which represents about 10% of TI's worldwide capacity.  The company estimates it will reinstate production in stages, beginning with several lines in May and returning the factory to full production in mid-July, which translates to full shipment capability in September.  This schedule could be delayed if the region's power grid is unstable or if further complications prevent the re-start of equipment.  TI is moving quickly to shift production to other fabs and so far has identified alternate manufacturing sites for about 60 percent of Miho's wafer production.  Work is underway to increase this percentage by moving the production of additional products.  Texas Instruments

It would appear that  overall semiconductor production hasn't been as severely damaged as first thought, however analysts are predicting that the material supply, basic traffic reconstruction, and overall infrastructure challenges including rolling black-outs, water shortages, gasoline shortages and more, will have more of an impact on the supply of semiconductor (and associated finished goods products) than production line damage. http://www.evertiq.com/news/19130