Disaster hits Japan's semiconductor demand

Disaster hits Japan's semiconductor demand

IDC notes chip demand in Japan is down after this year's earthquake, tsunami

The March earthquake and disaster in Japan are still affecting the global semiconductor market and may continue to do so for months to come.

But one industry analyst said that, unlike the months immediately following the disaster , the problem now isn't that Japan can't keep up with supply needs . Shane Rau, an analyst with IDC, said the problem now is on the demand side.

"The supply chain [in Japan] was able to adapt fairly quickly to any disruptions," Rau said. "The longer-term issue has been more on the demand side ... This has affected people's ability to function and survive. When they're trying to find homes and necessities , they're not thinking about buying PCs."

Japan's role as a semiconductor consumer is significant. In 2009, Japan accounted for 15.3% of the world consumption of semiconductors. This year IDC expects that number to drop to 14.2%.

IDC is forecasting worldwide semiconductor growth of 7% this year, according to Rau, down from about 8% last year. One reason that IDC lowered its forecast is because of the disaster in Japan and its effect on the demand for electronic systems inside Japan, he said.

IDC is also predicting that growth in semiconductor demand in Japan for 2012 will be down to 0.9%, compared with 3.6% growth in 2011. IDC had initially predicted that 2011 would see 5.6% growth in Japan but that number was later lowered to 3.6%.

"That's a flagging number for Japan , and part of that is the earthquake and the ongoing effects of that," Rau said." It's such low growth for a country that has been such a power player in the high-tech market."

Of course, after Japan makes headway in rebuilding and starts buying computers, smartphones , automobiles and televisions again, some of that demand will come back.

"Companies [in Japan] and individuals simply aren't buying PCs. They will by fits and starts," Rau added. "Reconstruction will boost demand but then there will be a lot of folks who just aren't ready to buy again because they're worried about radiation and rebuilding their homes, getting insurance money... so many things that come before a discretionary purchase like a PC."

However, Rau said the disaster this year fed into a larger trend that has Japan becoming less of a force in the worldwide demand for computer chips.

"It's a little bit of stagnation in Japan that has been in effect," Rau said, adding that Japan's demand has been showing a long-term decline. "Other countries, like China, are overshadowing Japan in terms of semiconductor consumption.

He pointed out that while Japan is dealing with the earthquake and tsunami aftermath, the country also is facing tough economy times, including a drop in exports due to the high values of the yen as well reactions to the troubled world economy. Rau noted that demand should start to come back in 2013 but even then overall chip demand out of Japan will be weaker.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin or subscribe to Sharon's RSS feed . Her e-mail address is .

Read more about hardware in Computerworld's Hardware Topic Center.

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