Japan disaster puts historic hurt on chip industry

It could be six months before semiconductor production returns to full speed, analysts say

By Sharon Gaudin
April 1, 2011 03:48 PM ET

Computerworld - No other disaster has hurt the worldwide computer chip industry more than last month's earthquake and tsunami in Japan, according to analysts.

Japan is struggling to get back on its feet and back to business after the country was devastated by a series of disasters that hit the country starting on March 11.

The disaster, including the earthquakes, a tsunami and an ongoing crisis they caused at the country's nuclear power plants, has not only damaged semiconductor manufacturing facilities, but also affected Japan's electrical supply and transportation infrastructure.

Thus, many companies are having trouble getting important supplies and shipping out the products they have manufactured.

And it could be four to six months before semiconductor production fully resumes in Japan, said Dale Ford, a senior vice president with IHS iSuppli, a research firm. And that will have a major impact on worldwide supply since Japan is a major cog in the global semiconductor manufacturing process.

Actually, Ford noted that a few of Japan's production facilities are so badly damaged that they may never come back online again.

Japan Disaster: The aftermath (pic from Online USA News)

"This is the biggest impact on the electronics supply chain in the history of the semiconductor industry," said Ford during a Webinar that iSuppli hosted Friday. "We've had other disasters but this is the most significant supply chain impact that the industry has ever experienced."

iSuppli reported last month that the disaster in Japan is currently putting a pinch on 25% of the worldwide production of silicon wafers used to make computer chips.
But the trouble is going further than that, according to Ford.

Silicon wafer production has been affected, along with the production of LCD screens, silicon and chemicals, like hydrogen peroxide, used in the manufacturing of computer chips.

Len Jelinek, a director and chief analyst with iSuppli, said that 75% of the global supply of hydrogen peroxide has been affected by the disaster in Japan. The chemical is used to build semiconductor wafers.

"This is a critical situation in that numerous manufacturing fabs that use this chemical are unable to get adequate supplies, which results in slow downs," said Jelinek. "This is rapidly turning into a very concerning issue."

Ford noted that three Japanese facilities that make silicon have not yet been able to return to operation since the earthquake hit on March 11.

"Corresponding wafer manufacturers are scrambling right now to qualify alternative sources," added Ford. "Most manufacturers have a three-to-four-week supply of wafers on site. We can probably count on three to four weeks where we'll have some impact on production until companies get alternative sources of silicon."

Ford also pointed out that the production of Apple's highly popular iPad tablets could be affected by the disaster since production of four components, like the WiFi module and touch-screen controller, needed to build them have been hurt.

"In the production of equipment, you can't have 94% of the parts," said Ford. "You need 100% of the parts to build any device."

However, tablets and computers won't be the hardest hit. No, that distinction goes to the automotive industry, iSuppli reported.

Renesas Technology, which is a key supplier of computer chips for automobiles, has been hit hard, not only by the earthquake and tsunami, but also by the rolling electrical brown-outs and black-outs.

The company has partially resumed operations at five of its chip plants. And while several more are expected to go back online, it's likely to be only in a limited capacity until the blackouts are over. And that could take months.

Malaysia looks to higher ICT spend

Malaysia's ICT spending is expected to rise this year and growth will be driven by several emerging technological trends, say industry watchers.

By Edwin Yapp
February 1, 2011

In its annual ICT predictions, research firm IDC noted that IT spending in the country will grow by 9 percent from US$5.9 billion in 2010 to US$6.5 billion this year. Spending in the telecommunication sector is expected to hit US$7.3 billion in 2011, up 5.3 percent from 2010.

Roger Ling, research manager for IDC Asean, said more changes are expected in the local ICT market that will drive this year. The total IT spending for Malaysia, driven mainly by purchases of hardware and packaged software, grew 6 percent in 2010, he added.

Ling said: "The growth in IT spending in 2011 is expected to be driven by factors such as the government's continued efforts to increase the level of broadband penetration, and outsourcing initiatives by organizations looking to address the increased IT complexity." Other factors include the continued adoption of system infrastructure software to operate and manage computing resources, he added.

In its annual prediction, Frost & Sullivan pointed to wireless broadband and cloud computing as two growth areas in the local ICT sector.

"The wireless broadband subscriber base overtook its fixed counter in 2010 and we expect this trend to accentuate leading to, among other things, the increased demand for smartphones and more competition among wireless players," said Nitin Bhat, Asia-Pacific partner and vice president for ICT Practice, Frost & Sullivan.

In an e-mail interview, he noted that cloud will gain significant traction this year, driven by the "twin factors of supply-side maturity and demand-side understanding". "We see a high propensity of trials, and some transactional-based cloud computing adoption among enterprises in Malaysia," Bhat said.

Talking cloud

According to Ananth Lazarus, managing director of Microsoft Malaysia, IT investments in both the private and public sector will shift toward the cloud this year, driven by two key factors.

The first, he said, is business needs. Second, Lazarus said the government's transformation programs will see key projects taking off this year.

"The promises of the cloud are applicable [to these programs]. Reducing costs, providing flexibility and agility in how organizations use their IT resources, ease of adoption and implementation, and not least, allowing organizations to explore and develop innovative services with a low cost of entry is what the cloud can do," he said in an e-mail interview.

Customers will also start to explore the tradeoffs between private and public cloud offerings. Large enterprises that have been testing the waters will begin more earnest deployments and will aggressively look at building their own private clouds, he noted.

Early adopters will serve as proof-points and best practices will encourage cloud adoption among small and midsize, he said, adding that government agencies would initiate discussions on key issues such as data sovereignty and public policy.

Johnson Khoo, managing director of Hitachi Data System (HDS), noted that businesses this year, in particular, will start looking at new investments in IT infrastructure and services, such as data centers, while continuing to focus on keeping costs low and maximizing their existing IT investments.

In an e-mail interview, Khoo noted that with the announcement under the government's Economic Transformation Program (ETP), Malaysia is seeking to be a world-class hub for data centers in the region. The ETP is designed to boost the country into a high-income nation by doubling its per capita income to US$15,000 by 2020. A bulk of the program involves infrastructure-driven projects such as the Mass Rapid Transport system due to kick off in July.

He said HDS expects to see growing interest in data center infrastructure and related services such as co-location and Web-hosting, managed networks, disaster recovery and other outsourcing services.

Skilled workers needed

Khoo, however, cautioned that Malaysia still lacked a skilled and knowledgeable workforce to complement these infrastructure investments. He noted that the country faces a shortage in human capital with skills that are particularly crucial for the ICT industry.

"Malaysia is globally recognized as a profitable regional hub for shared-services activities," he said. "It is vital that both the government and [industry] intensify efforts to address this to remain competitive against our neighbors in the region."

Yuri Wahab, country general manager for Dell, concurred. "More initiatives such as the newly established Talent Corporation aimed at attracting human capital, including Malaysians working overseas, are vital to ensure the nation's talent pool grows and that our knowledge workers contribute positively toward the development of the country," Wahab said.

He also expressed enthusiasm for Malaysia's ICT industry, pointing to the rollout of the country's high-speed broadband initiative. He added that it will promote greater digital inclusion, which is a key contributor to economic growth.

"This would allow more Malaysians and local entrepreneurs to connect to and participate in an increasingly global and borderless economy… We believe that this will also drive ICT consumption in the country," he said.

Source: ZDNet Asia

High Speed Broadband Seen As Key Enabler for Malaysian’s Tranformation

Mar 25th, 2010

KUALA LUMPUR, March 25 (NNN-BERNAMA) -- Prime Minister Najib Tun Razak says emphasis must be given to develop world class infrastructure in an effort to transform Malaysia into a developed and high-income country and describes high-speed broadband (HSBB) as a key enabler to change Malaysia from a medium-income to a high-income country.

"Definitely, HSBB will make Malaysia a 21st Century nation," he said when launching the country's HSBB service along with the National Broadband Intiative (NBI) here Wednesday night.

He said the HSSB service -- which provides a minimum speed of 10 Megabits per second (Mbps) -- would have a huge impact in stimulating the economy, enhancing competitiveness, reinforcing local and foreign investors' confidence, enriching creative and innovative minds, and as a conduit to disseminate information and knowledge to the people.

Image for illustration purpose only (courtesy of Google)

"It cannot be denied that HSSB will make our lifestyle more sophisticated, making it easier for us to communicate with one another. For example, I had been using this service when I invited 300 of my Facebook friends to have tea with me recently," he added.

"From 138,000 who have registered as my Facebook friends, I invited 300 of them for a tea reception. I feel this is my way of communicating with the people directly."

Najib said the government decided to launch a public and private partnership (PPP) with an allocation of 2.4 billion Ringgit (one USD = about 3.3 Ringgit) in three and half years while Telekom Malaysia, the country's dominant fixed-line and Internet service provider, would provide 8.9 billion Ringgit more over 10 years.

He said HSBB should be understood and embraced as it would benefit the country, economy, competitiveness and individuals.

"Besides ensuring quality inventory and services, we must tell the people that this is for their benefit. I hope the question of public education will also be tackled to ensure that the demand for high-speed broadband will increase," he said.

In driving the social and economic transformation towards achieving the high-income nation objective, Najib announced six national broadband initiatives.

First, 246 community broadband centres will be set up for 615,000 people at a cost of 60 million Ringgit. Secondly, People's Internet Centres will be set up at 138 Information Department premises nationwide to benefit 400,000 users.

Thirdly, e-kiosks will be provided at community centres and Mukim (sub-district) offices in 1,100 mukim nationwide at a cost of 4.0 million Ringgit.

Fourthly, a total of 873 telecommunication towers will be built, more than half of them in the two eastern Malaysian states of Sabah and Sarawak on the island of Borneo.

Fifthly, 1.0 billion Ringgit will be allocated from the Universal Service Provision (UPS) Fund, with the agreement of all service providers who contribute to it, to provide laptops to 100,000 needy students nationwide.

Sixthly, Telekom Malaysia agrees to reduce its broadband package bundled with netbooks from 50 Ringgit to 38 Ringgit a month while in the USP-supported areas it would be further reduced to 20 Ringgit a month. — NNN-BERNAMA

Source: Brunei fm