Electronics Production | April 20, 2011
IC industry production—Always in constant danger!
Researchers estimate that there are about 80'000 earthquakes globally each year, with most being too minor to notice. Since the earliest days of IC production in Silicon Valley, the IC industry has always had the majority of its fabrication facilities located in seismically active regions.
Moreover, it appears that over time, the IC producers and their customers have just come to accept this situation as a fact of life.
Figure 1 shows that in 2010, almost two-thirds of worldwide IC industry capacity was located in seismically active areas. As shown, Japan and Taiwan had essentially the same level of IC capacity in 2010, and, with both countries considered entirely seismically active, had the same amount of IC capacity exposed to potential earthquake damage.
© IC Insights
As shown in Figure 2, fully 90% of pure-play IC foundry capacity is located in seismically active regions! Since the two largest IC foundries in the world (TSMC and UMC) have such a significant presence in Taiwan, a disastrous earthquake or typhoon in that country would have serious ramifications for the entire electronics supply chain.
In fact, it is IC Insights' opinion that because IC foundries have so many different customers and are sole-source producers for such a wide variety of part types, the ramifications of damage to IC foundry fabrication facilities would be much greater than damage done to individual IDM IC fabs.
© IC Insights
IC Insights was once contracted to perform a proprietary market research report for a large insurance company. This company wanted to develop a model that showed how much in electronic system sales would be lost if the IC fabs in Hsinchu, Taiwan (just one of the Science Parks in Taiwan) were shut down for one, two, or three months due to damage caused by an earthquake or typhoon. We knew this company was serious when they showed us a plot of the location and severity of every earthquake and the path of every typhoon that had hit Taiwan over the last 50 years!
IC Insights still remembers being shocked at how far-reaching the impact of an extended shutdown of the IC fabs in Hsinchu, Taiwan would be. The bottom line was that for every month the IC fabs in Hsinchu were shut down, the electronic system industry would lose at least USD 10 billion in sales!
Although the IC industry has always had the majority of its fabrication capacity located in "dangerous" areas, most buyers of ICs don't give this a second thought. Ultimately, all that really can be said about the ability to predict devastating natural disasters is that everything is just "fine" until one day it isn't.
However, while these tragic events are impossible to predict, they are not impossible to plan for. IC Insights believes that the March 11, 2011 Japan earthquake might just be the wake-up call that spurs the entire electronics supply chain to create new contingency plans, just in case......
© IC Insights
As shown in Figure 2, fully 90% of pure-play IC foundry capacity is located in seismically active regions! Since the two largest IC foundries in the world (TSMC and UMC) have such a significant presence in Taiwan, a disastrous earthquake or typhoon in that country would have serious ramifications for the entire electronics supply chain.
In fact, it is IC Insights' opinion that because IC foundries have so many different customers and are sole-source producers for such a wide variety of part types, the ramifications of damage to IC foundry fabrication facilities would be much greater than damage done to individual IDM IC fabs.
© IC Insights
IC Insights was once contracted to perform a proprietary market research report for a large insurance company. This company wanted to develop a model that showed how much in electronic system sales would be lost if the IC fabs in Hsinchu, Taiwan (just one of the Science Parks in Taiwan) were shut down for one, two, or three months due to damage caused by an earthquake or typhoon. We knew this company was serious when they showed us a plot of the location and severity of every earthquake and the path of every typhoon that had hit Taiwan over the last 50 years!
IC Insights still remembers being shocked at how far-reaching the impact of an extended shutdown of the IC fabs in Hsinchu, Taiwan would be. The bottom line was that for every month the IC fabs in Hsinchu were shut down, the electronic system industry would lose at least USD 10 billion in sales!
Although the IC industry has always had the majority of its fabrication capacity located in "dangerous" areas, most buyers of ICs don't give this a second thought. Ultimately, all that really can be said about the ability to predict devastating natural disasters is that everything is just "fine" until one day it isn't.
However, while these tragic events are impossible to predict, they are not impossible to plan for. IC Insights believes that the March 11, 2011 Japan earthquake might just be the wake-up call that spurs the entire electronics supply chain to create new contingency plans, just in case......Ad
