For starters, the 2011 Global Press Conference in Alicante, Spain (held from 15-16 April 2011) is in itself a precursor to the IFA consumer electronics show in Berlin, Germany (held in September every year). Hundreds of journalists from various parts of the world were at the conference, and besides being a good opportunity for them to mingle and establish contacts, it was also a two-day briefing extravaganza on trends, statistics and forecasts on the consumer electronics industry prior to the show in Berlin.
At one of the Power Briefings session held today, leading market researcher in displays, DisplaySearch was able to put some perspective on how the recent Great East Japan earthquake has impacted or would impact the supply chain of display component manufacturers within the region and beyond.
At the current moment, there is significant on-going shortage of electrical power in the eastern part of Japan. According to DisplaySearch, these areas -- the Tohoku and Kanto (including Tokyo) regions -- will see electricity shortage for a long time. It also doesn't help that in Japan, power grids are different in western (60Hz) and eastern (50Hz) areas, thus there is very limited interconnectivity between the two, especially in situations when one grid is crippled and unable to tap on an adjacent grid for support.
It also doesn't help that eastern Japan is seeing rolling blackouts as part of a power conservation initiative. With that, transportation is naturally affected, and thus, the supply chain of materials. It is interesting to also note that at some electronics stores in Japan, TVs on display are turned off in an effort to conserve power and turned on only when customers expressed interest.
While flat panels are largely made in southern Japan, there are still a few manufacturing facilities within the affected area. One of them is the Panasonic 26" and 37" flat panel manufacturing plant (previously an IPS-Alpha production facility) in Mobara (Chiba Prefecture). Its Himeji facility (in the Hyogo Prefecture, near Osaka) is unaffected however.
Of greater concern is the disruption to some semiconductors normally used for flat panel displays and TVs (including connectors). While DisplaySearch believes that this is solvable with alternative sourcing in the long term, it is believed that this disruption is short-term. The researcher also believes that there might be a short supply of two key materials in flat panel display production from end April through May.
These two key materials are Indium Tin Oxide (ITO) and Anisotropic Conductive Film (ACF).
ITO is widely used because of its electrical conductivity and optical transparency. It's basically a transparent conductive coating used for thin film such as those found on flat panel displays of all sorts. ITO supplier, JX Nikko, which has a 50 per cent share worldwide, is based in the Ibaraki Prefecture, and was damaged by the quake. While panel makers have safety stocks for the next one month, DisplaySearch believes that there is a risk that these constraints may persist, as many Taiwanese panel makers are reliant on JX Nikko for their supplies.
ACF, on the other hand, of which Hitachi Chemical (Ibaraki Prefecture) and Sony Chemical (Tochigi Prefecture) are leading suppliers, is used as an interconnect between display and electronics connections to the glass substrate of the LCD.
According to DisplaySearch, both supply factories were damaged in the quake but have since restarted operations. Though panel makers have stocks to last for the next 1-2 months, a partial restart to supply operations will at least minimize even greater impact to the supply chain. Nippon Chemical, a supplier of materials to make ACF, is understood to have a factory 50km from the Fukushima nuclear power plant as well.
Finally, another component, NF3, a cleaning chemical for display manufacturers, which was in short supply prior to the quake, is now in even shorter supply.
Paul Gray, Director of Europe TV Research for DisplaySearch, shares his thoughts: "While there is significant disruption, we anticipate that most of it is short term. It comes at a time of excess capacity and stock in the supply chain. This gives some breathing space to bring up alternative sources of supply or repair damaged capacity. Long-term, the level of disruption caused by limited electricity supply remains the biggest concern."
While DisplaySearch did not go into a more analytical forecast of how these supply chain disruptions would affect flat panel display productions beyond May 2011 during its presentation, expect to see some recalibrations in how some flat panel display manufacturers will tweak their supply chains.
Terence Ang / Former Supervising Editor for HWM, HardwareZone.com & GameAxis
Terence Ang used to be the Supervising Editor for the New Media division in Singapore, where he worked with the editorial teams behind HardwareZone.com and HWM the magazine. In that role, he looked at ways the teams in Singapore can collaborate with the Editors in Malaysia, Philippines, Indonesia and Thailand. Terence is currently the Product Manager but contributes to the blog section whenever he can (or finds something interesting to talk about).