The Sea of Japan earthquake that struck Japan’s Noto Peninsula on January 1st has forced the suspension of operations at multiple electronics production facilities, including a multilayer ceramic capacitor (MLCC) plant owned by Taiyo Yuden.
However, the quake is unlikely to result in significant supply disruptions due to weak market demand and the resiliency of domestic suppliers.
What This Means for MLCC Production
The deadly 7.6 magnitude temblor struck Japan’s Noto Peninsula on the country’s west coast. The quake reportedly shut down operations at Taiyo Yuden’s new MLCC facility in Niigata and at a Toshiba-owned fab and silicon wafer facilities for Shin-Etsu and GlobalWafers.
No significant damage was reported at the Taiyo Yuden facility, raising expectations that the shutdown will be short-lived for the world’s number-two-ranked MLCC supplier.
The earthquake comes at a time when MLCC demand is low and inventories are rising, mitigating the impact of any supply disruption on buyers. The Commodity IQ Demand Index for capacitors has been below the baseline since April 2022, indicating a prolonged decline in sales.
Meanwhile, capacitor stockpiles started to rise in September 2023 following 12 months of decline, according to the Commodity IQ Inventory Index. The combination of weak demand and added capacity is causing inventories to swell.
Supplyframe expects the semiconductor fabs affected by the quake to recover quickly.
The Resilience of Japanese Suppliers
In the past, chip suppliers took weeks or months to recalibrate sensitive semiconductor manufacturing equipment following an earthquake, with Sony requiring a half year to reestablish production at an image-sensor facility following the Fukushima earthquake of 2011.
However, with their extensive experience with quakes, Japanese suppliers have implemented procedures that allow fabs to restart production within days.