Researchers highlight risk to electronics supply chain

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The disruption to the global electronics supply chain caused by the Japan earthquake could recur in other regions of Asia because of the high concentration of technology industries in certain countries, according to industry specialist IHS iSuppli.

Dale Ford of IHS said: “The disaster in Japan has exposed how the focus of electronics manufacturing in a single country can massively impact the highly interconnected global technology industry.

“Because of this, it’s worthwhile to consider what could happen if a production disruption were to strike other key electronics production regions where manufacturing is highly concentrated. These regions include Taiwan, South Korea and certain areas of China. As we move forward, the global electronic industry will have to learn how to manage potential disruptions in various regions.”


IHS iSuppli points out that Taiwan is the world’s leading country for semiconductor foundries – accounting for 67 per cent of global production. Taiwanese foundries Taiwan Semiconductor Manufacturing, and United Microelectronics serve the manufacturing needs of semiconductor companies all over the world, playing a pivotal role in the global chip supply chain. Worldwide, there are more than 150 fabless semiconductor companies using foundry services, representing more than $30 billion in annual revenue.

Some of Taiwan’s other major contributions to the global electronics supply include:
* 24 per cent of total semiconductors
* 37 per cent of display drivers
* 58 per cent of small/medium-sized liquid crystal display panels
* 34 per cent of large-sized LCD panels

South Korea

South Korea presents a particular concern, says IHS iSuppli, since so much manufacturing is concentrated in the Seoul metropolitan area.

“Nearly half of all global production of DRAM occurs in the Seoul area,” observed Mike Howard, principal analyst for DRAM and memory at IHS. “If manufacturing were to be disrupted by some event occurring in this small geographic area, the impact on the global electronics supply chain would be devastating.”

Nearly 40 per cent of the world’s DRAM capacity is located near the city. Seoul is home to one of the world’s true electronics powerhouses: Samsung Electronics. Also in Seoul is Hynix Semiconductor, another dominant player in the DRAM industry.

South Korea’s overall contribution to global electronics production includes:
* 59 per cent of DRAM
* 49 per cent of data flash memory, also known as NAND flash
* 27 per cent of display driver semiconductors
* 51 per cent of large-sized LCD panels
* 18 per cent of small/medium LCD panels


China is home to most of the world’s original design manufacturing which is the production of electronic equipment on behalf of the world’s major electronic brands. Much of this manufacturing is concentrated in the Shanghai and Shenzhen metropolitan areas. Four out of five mobile PCs are produced in the Shanghai area, while one-quarter of cell phones are made in Shenzhen.


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