Supply Chain Hits Again After Japan Parts Makers Halt Production After the Earthquake

Japan's Renesas Electronics Corp, Murata Manufacturing Co Ltd, Sony Group Corp, and other precision parts makers halted some operations jolted the country's northeast, the latest blow to the global supply chain after an earthquake.

FREMONT, CA: Following an earthquake in Japan's northeast, Renesas Electronics Corp, Murata Manufacturing Co Ltd, Sony Group Corp, and other precision components producers paused certain operations on Thursday, the latest hit to the global supply chain. Even as Japan's consumer electronics supremacy waned, firms such as Murata (6981.T) ceramic capacitors and Sony (6758.T) image sensors have carved out a world-leading niche in highly specialized components. The manufacturing suspension comes after pandemic-related component shortages have slowed auto and electronics production worldwide.

An analyst at Ace Research Institute opinioned that an earthquake halting manufacturing would be a pure negative given that components are now selling as fast as they can be made. The 7.4 magnitude quake struck just before midnight on Wednesday east of Fukushima prefecture, the same area hit by Japan's most powerful earthquake 11 years ago. After a fire at its Naka factory in Ibaraki prefecture last year, Renesas (6723.T) became a supply chokepoint. The company, which manufactures about a third of the microcontroller chips used in automobiles worldwide, announced on Thursday that it has temporarily halted production at two sites and partially ceased operations at a third. The sophisticated 300-millimeter wafer Naka plant was one of them. According to Ford, the fire caused up to 80 percent of the company's lost vehicle production in the second quarter of last year.

The earthquake has resulted in the shut down of Murata’s four factories- the world’s largest provider of ceramic capacitors, which are used in cellphones, computers, and automobiles. According to the report, a fire broke out at one of the chip inductors' manufacturing facilities, which eventually doused. The global production target of Japan’s largest automaker- Toyota Motor Corp, is likely to be 10 percent lower in May and 5 percent lower in June than previously expected, highlighting the industry’s strain.

Even though many companies are not household names in the West, they are increasingly being viewed as significant national assets as China and the United States compete in the technology sector. Sony, one of Japan's most well-known companies, announced that the manufacturing of storage media, laser diodes, and image sensors had been halted at two facilities in Miyagi prefecture and the third unit in Yamagata prefecture.