Companies recover in aftermath of Japan earthquake

Companies with operations in Japan are repairing factories and accounting for employees as recovery continues in the aftermath of a devastating earthquake and tsunami that struck the country’s eastern coast on March 11.

The 9.0-magnitude earthquake and ensuing tsunami killed more than 9,000 people and caused extensive damage to buildings and factories along Japan’s eastern coast. Some factories and assembly plants are now operational, though blackouts and closure of transportation links continue to hurt Japan’s supply chain.

Hewlett-Packard’s (NYSE: HPQ) office in Sendai, which is close to the earthquake’s epicentre, sustained significant interior damage and remains closed, the company said in a Tuesday filing with the U.S. Securities and Exchange Commission. HP said its Tokyo office sustained no damage, but that the company was continuing assessment of the situation. All of the company’s employees are safe, HP said.

In the filing, HP also said it obtained components, such as LaserJet printer engines and toner, from partners in Japan. The company termed the process an “evolving situation.” An HP spokesman declined to clarify whether supplies of printer engines and toner were affected by the earthquake and tsunami, saying it would not comment beyond the SEC filing.

Texas Instruments said its manufacturing site in Miho was substantially damaged, but that teams were working to reinstate production, which could reach full capacity by mid-July. TI also said production would be restored to full capacity in another factory at Aizuwakamatsu by mid-April. TI’s third factory in Hiji was undamaged and running at normal capacity.

Sony earlier said it would idle production in factories in different locations that produce TVs, camcorders, digital cameras and other equipment until at least March 31 due to problems obtaining raw materials and components.

In a research note issued on Monday, IHS iSuppli said that two Japanese companies — Mitsubishi Gas Chemical Co. and Hitachi Kasei Polymer — would resume production of printed circuit boards in two weeks. PCBs are critical parts used in products including PCs, smartphones and digital watches.

Fujitsu in a statement last week said it would resume recruitment for employees originally scheduled for April 1 on June 1. The company saw large-scale damage to its buildings and production facilities in the Iwate, Miyagi and Fukushima prefectures.

Some Japanese chipmakers remain affected by the power outages and shutdown of transportation links as they try to get operations back to normal. Shin-Etsu Chemical, a major supplier of silicon wafers, last week said that two of the four factories are up and running, and that it was assessing damages at two other factories.

The shutdown of wafer factories could have an impact on DRAM production over the next few months, said Mike Howard, principal analyst of DRAM at iSuppli.

Japanese DRAM maker Elpida Memory, which gets wafers to make DRAM from factories on Japan’s east coast, could be hurt in the long term, Howard said. Elpida may have internal stock of wafers from which to continue production, but future shortages could hurt production over the coming months.

Elpida has said a chip-testing and assembly plant located in northeastern Japan is back up and running after power outages led to an initial closure. The company’s main production facility in Hiroshima, which is far from the epicenter, suffered little impact. Elpida held a 13.4 percent market share of the DRAM revenue worldwide during the fourth quarter of 2010, according to iSuppli.

One of the world’s largest NAND flash makers, Toshiba, has not talked about the earthquake’s impact on operations. However, the company last week said it would cooperate with Tokyo Electric Power Co.’s request to cut electricity consumption in line with business operations related to essential services.

Prices of NAND flash and DRAM went up after the earthquake, and the situation remains volatile, analysts said.

It’s hard to assess the long-term fallout if NAND flash production slows in Japan, said Mike Yang, principal analyst of iSuppli. Most of the NAND flash production is concentrated in South Korea, he said.

There is a chance that the price of products like USB drives or SD cards go up slightly, Yang said. Because of long-term relationships with suppliers, PC makers would be able to stem any rise in prices of solid-state drives, which are also price-sensitive.

“Only time will tell how the prices play out,” Yang said.

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Agam Shah
Agam Shah
Agam Shah is a reporter for the IDG News Service in New York. He covers hardware including PCs, servers, tablets, chips, semiconductors, consumer electronics and peripherals.

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