It's now becoming increasingly clear that the global supply chain for electronics is going to be far more affected by the earthquake-tsunami-nuclear crisis still unfolding in Japan than previously thought.
Take for example the attention today on lithium ion batteries used in notebook PCs. Demand right now is not terribly high--it's a time of the year when consumers are buying fewer PCs--but consider what happens if the crisis persists. As Taiwan's Digitimes observes, a good bit of the world's production ecosystem for lithium ion batteries used in notebooks are not only located in Japan, but many are in areas affected by the quake or within the evacuation radius of the troubled nuclear power plant there.
Sony, which makes notebook batteries, and Hitachi, which makes a key battery part called an anode, both operate plants in the disaster area, and both have been shut down for the time being, according to a research report from Pranab Kumar Sarmah at Daiwa Securities in Hong Kong. Numerous other companies that make battery parts also operate in the disaster area, and most of them are affected.
What about the iPad? I just heard from Wayne Lam, an analyst at iSuppli, the research firm that tore down the iPad 2 the other day. He tells me markings on the iPad 2?s three-cell battery pack include a label that reads "assembled in China." However, he says that applies only to the finished battery pack. A closer look at the markings reveal a reference to "Apple Japan." He thinks that's sufficient proof the battery cells came from Japan. "Typically, battery cells are made at the site of assembly, but since this li-ion polymer battery is unusually thin, it may be the case that it requires battery cell manufacturing technologies that Japan has."
Then there's the LCD display market. LCD manufacturing is an extremely precise process, one that doesn't take kindly to the power shortages and rolling blackouts caused by the loss of generating capacity at the crippled Fukushima Daiichi power plant. Typically, Japan derives about a third of its power capacity from nuclear power, and this plant constituted a big portion of that. Again, it's Sony and Hitachi plants located in areas affected by the disaster. Between them, the two companies produce 90 percent of the world's supply of Anisotropic Conductive Film, an interconnect material that's widely used in LCD panels.
Another key part in LCD displays--a color polarizer--is made by Fuji Film. Dale Ford, another iSuppli analyst, said earlier this week there have been indications that supplies of these have been impacted, which will drive prices up, which will in turn be reflected in the final price consumers pay for their TVs and monitors. Something tells me the lingering effects of this disaster are going to trouble the tech economy for some time to come, especially if the state of Japan's power grid remains uncertain.