APRIL 16, 2011 (COMPUTERWORLD) By Sharon Gaudin - Researcher iSuppli reports that image sensors used widely in mobile phones, are in short supply. The disaster in Japan could cause a short-term slowdown on the manufacture of cell phones, analysts say.

The March 11 earthquake and subsequent tsunami and power outages in Japan has caused significant problems for the manufacturing of computer chips, as well as delays in transporting supplies to processor makers.

Research firm IHS iSuppli this week added that the disaster is impacting the production of complementary metal-oxide semiconductor (CMOS) image sensors. Shortages of that one component, iSuppli analyst Pamela Tufegdzic told Computerworld, will likely cause a slowdown in cell phone production.

"Cell phone manufacturers are waiting for these supplies, so production will slow down," she said. Tufegdzic added that she expects the problem to last for three months or less.

Tufegdzic added that it remains unclear at this point whether a slowdown in production will cause cell phone prices to rise.

CMOS technology is used in building integrated circuits for microprocessors and microcontrollers, as well as for analog circuits in image sensors and transceivers.

The research firm noted that two Japanese facilities that manufacture these sensors were affected by the disaster.

ISuppli reported that Toshiba Corp.'s Iwate Image Sensor fab, which produces logic chips and CMOS image sensors for mobile phone cameras, remains shut down because of extensive damage. The company itself reported earlier this week that executives there expect to restart partial production next week. The initial reopening plan was delayed due to a strong aftershock on April 7.

Toshiba, which in 2010 was the world's fifth-largest supplier of handset image sensors, has said that it is leaning on its other manufacturing facilities to alleviate impact on its customers.

Sony, the sixth largest global supplier of image sensors, is maintaning its regular manufacturing operation, but the disaster has caused problems in transporting CMOS image sensors to cell phone manufacturers, iSuppli noted.

"With their low cost and easy integration with other electronics, CMOS has long been the technology of choice for cell phone cameras," Tufegdzic said. "The Japan earthquake and subsequent logistical challenges have disrupted a portion of the supply of this key component."

The research firm also pointed out that supplies of an alternative image sensor technology - Charged-Coupled Devices or CCDs -- appear to be unaffected by the disaster at this point. CCD image sensors, however, offer a higher image quality and generally are used in digital still cameras, while CMOS sensors are more traditionally used in mobile phones.

As Japan deals with massive loss of life, a nuclear meltdown crisis, damaged roads, buildings and communities washed away, as well as rolling electrical brown outs and black outs, its manufacturing industry and economy have taken a major hit.

And with Japan's technology business so intrinsically tied to the industry here in the U.S. and around the world, the business effects of this disaster will be widely felt.

Late in March, analysts at iSuppli said no other disaster has hurt the global semiconductor industry more than last month's earthquake and tsunami.

Japan disaster puts historic hurt on chip industry By Sharon Gaudin April 1, 2011 03:48 PM COMPUTEWORLD

[PHOTO - Before-and-after images of earthquake damage in Japan show the destruction caused by last week's tsunami. (Image: Google)]

It could be six months before semiconductor production returns to full speed, analysts say. No other disaster has hurt the worldwide computer chip industry more than last month's earthquake and tsunami in Japan, according to analysts.

Japan is struggling to get back on its feet and back to business after the country was devastated by a series of disasters that hit the country starting on March 11.

The disaster, including the earthquakes, a tsunami and an ongoing crisis they caused at the country's nuclear power plants, has not only damaged semiconductor manufacturing facilities, but also affected Japan's electrical supply and transportation infrastructure.

Thus, many companies are having trouble getting important supplies and shipping out the products they have manufactured.

And it could be four to six months before semiconductor production fully resumes in Japan, said Dale Ford, a senior vice president with IHS iSuppli, a research firm. And that will have a major impact on worldwide supply since Japan is a major cog in the global semiconductor manufacturing process.

Actually, Ford noted that a few of Japan's production facilities are so badly damaged that they may never come back online again.

"This is the biggest impact on the electronics supply chain in the history of the semiconductor industry," said Ford during a Webinar that iSuppli hosted Friday. "We've had other disasters but this is the most significant supply chain impact that the industry has ever experienced."

iSuppli reported last month that the disaster in Japan is currently putting a pinch on 25% of the worldwide production of silicon wafers used to make computer chips.

But the trouble is going further than that, according to Ford.

Silicon wafer production has been affected, along with the production of LCD screens, silicon and chemicals, like hydrogen peroxide, used in the manufacturing of computer chips.

Len Jelinek, a director and chief analyst with iSuppli, said that 75% of the global supply of hydrogen peroxide has been affected by the disaster in Japan. The chemical is used to build semiconductor wafers.

"This is a critical situation in that numerous manufacturing fabs that use this chemical are unable to get adequate supplies, which results in slow downs," said Jelinek. "This is rapidly turning into a very concerning issue."

Ford noted that three Japanese facilities that make silicon have not yet been able to return to operation since the earthquake hit on March 11.

"Corresponding wafer manufacturers are scrambling right now to qualify alternative sources," added Ford. "Most manufacturers have a three-to-four-week supply of wafers on site. We can probably count on three to four weeks where we'll have some impact on production until companies get alternative sources of silicon."

Ford also pointed out that the production of Apple's highly popular iPad tablets could be affected by the disaster since production of four components, like the WiFi module and touch-screen controller, needed to build them have been hurt.

"In the production of equipment, you can't have 94% of the parts," said Ford. "You need 100% of the parts to build any device."

However, tablets and computers won't be the hardest hit. No, that distinction goes to the automotive industry, iSuppli reported.

Renesas Technology, which is a key supplier of computer chips for automobiles, has been hit hard, not only by the earthquake and tsunami, but also by the rolling electrical brown-outs and black-outs.

The company has partially resumed operations at five of its chip plants. And while several more are expected to go back online, it's likely to be only in a limited capacity until the blackouts are over. And that could take months.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, or subscribe to Sharon's RSS feed . Her e-mail address is sgaudin@computerworld.com.

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