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Tsunami Appeal - The Technology Industry Rallies Round

Andrew Williams


Tsunami Appeal - The Technology Industry Rallies Round

The Damage And Long Term Effects

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The terrifying events that unfolded in Japan put what we do in perspective. Our job is to survey the world of consumer technology and tell you what's worth spending your hard-earned money on, but it's often all-too easy to forget to look behind the curtain and consider the hundreds of thousands of people who work on these products worldwide.

The damage

Japan is home to the headquarters of many of the biggest names in tech. Sony, Canon, Olympus and Nikon are all based in Tokyo, Panasonic in Osaka - and all have been severely affected by the earthquake and ensuing tsunami of 11 March. Sony has closed seven plants, Canon three locations involved in the manufacture of screens, lenses and printers; Sharp's LED panel-making facility in Sakai has been closed down and Panasonic's EV Energy plant, involved in the manufacture of batteries for electric cars, has reportedly been destroyed. Hitachi's six factories in the afflicted area have all closed down and Texas Instruments has had to close two plants. Toshiba has announced that an assembly line making small LCDs will halt production for a month and Lenovo is worried about disruption to its production in next quarter.

Although these closures represent merely a fraction of the terrible destruction Japan has suffered, they could have knock-on effects that severely affect the tech market in general - and Japan's economy. The multi-stage process involved in the manufacture of consumer technology means that the closure of a component factory can have serious effects on many different products further down the line.

Japan produces around 40 per cent of the world's flash memory chips and 20 per cent of all semiconductors, and in anticipation of oncoming component shortages, the price of NAND memory chips has already shot up by 20 per cent. Used in scores of devices including the just-released iPad 2, the possible ramifications of component shortages like this are brought into sharp focus.

The long-term effects

How quickly Japan's production will recover is unclear, but the task of securing each plant in isolation isn't the only factor involved. Rolling power blackouts are in effect across Japan, and many factories not halted directly by the earthquake and tsunami have stopped production voluntarily in order to preserve power, on the advice of the Tokyo Electric Power Co (TEPCO).

Nuclear power provides approximately 30 per cent of Japan's energy, and at least 20 per cent of its nuclear network has been knocked out following the earthquake. Naturally, vital public amenities like hospitals will take precedence over a plant producing memory chips.

TEPCO officials have said that these power outages will continue at least until the end of April - so this stop-gap solution to the power shortage is not going to be all that brief. The production of Japan's technology factories is likely to be significantly affected for the duration of these measures. Businesses and schools have also been advised to reduce power consumption as much as possible to reduce the load on the power network.

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