The Japanese earthquake of two weeks ago has had a significant impact on the country's output of manufactured goods in every sector. As a result, the business markets are watching the company's silicon wafer and IC production carefully, with an eye towards foreseeing off any shortage-related price shocks.
Easy answers and clear predictions are nowhere to be found. Micron shares, for example, surged immediately after the quake following news that Toshiba
had halted NAND flash production. Company shares are still trading markedly higher than they were in late February, but the firm has since given notice that the net effect will take time to evaluate. "A number of our suppliers are in
Japan, and they do range from chemicals to materials to wafers," Chief Executive Steve Appleton told analysts on a quarterly conference call. "Some of them were not impacted and obviously some of them were."
Massive damage like the above make it quite difficult to determine when Japan will be back up to full strength.
It's one thing to ask a company if its primary suppliers have been affected; something else entirely to try to track down if the suppliers of suppliers of suppliers have been pinched somewhere along the line. Shin-Etsu, the world's leading manuacturer of silicon wafers, has had to shut down two of its manufacturing facilities while MEMC Electronic Materials, its primary competitor, has had to close plants of its own.
The nature of these disruptions makes it likely that we'll see unexpected bottlenecks or shortfalls well down the supply chain that ripple into major corporations. The fact that the quake hit near the end of Q1 means we don't expect corporate numbers to change all that much when results are released 2-3 weeks from now. Corporate Q2 projections will tell us much more about the impact of the Japanese quake than end-of-quarter results. At best, the global economy will suffer a misstep, the economic equivalent of missing the bottom stair. At worst, multiple companies could take months or years to return to pre-quake production levels. The degree of this longer-term damage should be much easier to assess just three weeks from now.