Negative Impact Of Supply Chain

Japan impact to hurt more than Yasi, flood rebuild

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The Japanese disaster—how does this impact the MEMS and compass ...

By Jérémie Bouchaud, Director and Principal Analyst MEMS & Sensors, IHS iSuppli

On March 11, Northern Japan experienced the nation’s largest ever recorded earthquake. Given Japan’s significance to the MEMS and magnetic compass industry—nearly a third of the MEMS in value were processed in Japan in 2010 and 97% of the digital compasses—IHS iSuppli’s MEMS and Sensor analysts have assessed the status of key Japanese fabs and the implications for the world MEMS industry.

To summarize the findings, the supply of MEMS and compass remains only slightly affected by the disaster, first, because of the southern geographic location of most fabs, and second thanks in many cases to the responsiveness of the Japanese fabs, and finally because MEMS and compass suppliers have relied on multiple fabrication plants for manufacturing.

In some cases, MEMS suppliers with alternative technology may even make gains against entrenched technologies that have been hurt more severely.

In fact the main effect of the Japanese earthquake on the world MEMS and compass industry is not on the supply side, rather the demand side, as OEMs are in some cases more severely impacted than the sensor suppliers, or bottlenecks elsewhere in the supply chain affect the customers of sensors suppliers.

32.5% of the MEMS processed partly or entirely in Japan last year

IHS iSuppli has calculated that 32.5% of the value of MEMS sensors and actuators in 2010 were processed, either partly or entirely, in Japanese facilities. This corresponds both to revenues from Japanese MEMS companies and from foreign companies that have their MEMS processed in Japan.

Nine out of the top 50 MEMS IDM and fabless manufacturers worldwide are Japanese companies, including Canon, Panasonic, Epson (#5, 6 and 7 respectively) and Denso (#13) in order of size. Japanese companies sold $1.38 billion worth of MEMS in 2010—21.3% of the world market requirement.

Japan commands a great share of the inkjet print head market. This category is the #1 MEMS device in terms of revenue in 2010. Epson and Canon held 36% of inkjet revenue in 2010. Panasonic is also producing professional print heads in smaller volumes (source IHS iSuppli Q1 2011 MEMS market tracker ).