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Lessons from the quake

Posted: 29 Mar 2011     Print Version  Bookmark and Share

Keywords:supply chain disruptions  lessons from Japan earthquake  earthquake's impact on semiconductor industry 

The semiconductor industry supply chain has seen the most disruption following the March 11 earthquake and tsunami, according to experts analysing the quake and its ill effects.

Historically, however, supply chain disruptions do not last throughout the year. NAND flash prices rose on March 14, but were stabilising by the end of that week.

As big as the quake was, the root of the current supply problems is actually the lack of planning and preparation on the part of Japan's power industry. To be more specific, utilities are being accused of regulatory oversight, political payoffs and poor choice of location.

The most important lesson to be learned from this disaster is that recovery largely depends on how efficient and meticulous a company had been in choosing a location for and building a fab, as well as on safety processes and procedures currently in place. What made Taiwan's Chi-Chi earthquake so devastating was the absence of simple processes such as tying tools down and double containment of gases and chemicals. If the same earthquake were to happen today, Taiwan would come out far better. The quake was severe, but the vibration had largely dissipated by the time it hit the semiconductor production areas.

Earthquake statistics

Table 1: Great earthquakes that have affected the semiconductor industry.

While the Sendai earthquake was one of the worst in history and ranks first in big shakers for the semiconductor industry, its adverse effects were limited because it was so far out to sea. Contrast the USGS shake map for Sendai against that for the Loma Prieta earthquake. In the areas where the closest fabs were, Loma Prieta's effects were more severe. Toshiba's NAND flash fabs, on the other hand, were way down past the green zone on the chart, thus explaining why they sustained little damage and recovered on the same day of the quake.

The tsunami did not impact most of Japan's semiconductor production. Still, its chip industry must contend with two key challenges—power and transportation. A fab covered by the government-mandated three-hour rolling blackouts certainly cannot operate normally and continuously. Moreover, Japan's rail systems run on electricity and train schedulers certainly did not make plans or provisions for such an event.

The need to plan for disruptions cannot be ignored. A case in point is Toshiba's flash fabs, which have been able to secure uninterrupted power and have thus resumed operations. It is always wise to have your own source of power, or at a minimum, an exemption similar to what hospitals get whereby power cannot be shut down. Another example is Globalfoundries' Dresden fab, which was built with a co-generation plant. The facility paid for itself by selling power back into the grid during peak hours, just like a homeowner does with solar panels. When a flood took out the local power plant, the fab went right on, virtually uninterrupted.

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