6 Ripple Effects on Electronics From the Japanese Disasters
If you thought the wait was long for an iPad 2 on its first day of sales, just wait. It could get a lot longer as production of parts is effected by the disaster in Japan. Americans bought nearly $120 billion dollars worth of goods from Japan last year, according to the United States International Trade Commission, and the country is responsible for 15% to 20% of the world's electronics supply, according to the Consumer Electronics Association.
While a great many products are made in China, some critical components come from the very regions hardest hit by the Tsunami in Japan. The Northern part of Japan is home to manufacturing facilities that make everything from computer batteries to memory chips to car parts. Since a great majority of production done in the effected area involves components and not finished products, U.S. consumers may not be impacted immediately (to find out more about how to donate safely and wisely to disaster relief, click here). But there is trouble ahead. Here's a run-down of what could be affected:
- Apple Products: Apple gets some of its components from Japan, and with the crisis ongoing, those parts will soon be in short supply. So for a hot product like the iPad 2, which is selling out fast all over the world, that could mean that factories in China that put the parts together will run out soon of five key components it gets from Japan. So even if you order an iPad 2 now, you'll likely have a longer shipping wait than expected.
- Japanese Brand Products: Some of the world's most notable brands like Sony, Toyota and Panasonic are Japanese companies with facilities, workers and supply chains affected by the earthquake, tsunami and subsequent power issues. Many issued statements immediately following the disaster about supply and product disruptions, and most continue to update trade partners and the public periodically via press releases.
- Cars of all Types: Even cars that are not made by Japanese companies may face delays in parts that are hard to get from other sources. Car lots could go from surplus to shortfall — already some companies are closing production facilities — and we all know that in the car market, a shortage of available cars will mean higher prices for consumers. Already, Toyota has stopped production at some plants and American car companies like GM that rely on Japanese components are effected: GM has stopped production on small pickup trucks in the U.S. and parts of Europe due to a disruption at the Hitachi plant that makes certain air flow sensors.
- Tablets, Laptops and TVs: Hitachi and Toshiba both make LCD screens and supply other brands, and according to Shawn Dubravac, chief economist for the Consumer Electronics Association, 7" and 10" touchscreens are already in short supply, although the supply chain is quickly stepping to fill the gaps. "We have heard about factories in the affected area loading their equipment onto trucks and moving, but these are small factories, not major semiconducter facilities," says Dubravac. "All of these things are way up the supply chain so it's literally months before we see any impact in the U.S., if at all. The supply chain is very robust and you can crank up production and we didn't enter this period with a lack of supply."
- Small Electronics With Memory Chips: Sony has several effected facilities and production of batteries, Blu-ray players and camcorders are all impacted. Memory chips made by Sony and others in the area will hurt digital camera companies the world over, and Canon, Nikon and Sony have all curtailed camera production following the earthquake.
- Anything That Ships in the U.S.: With the crisis in Japan and instability in the Middle East, gas prices continue to rise. That means that anything that needs to be shipped, by air, by truck or by delivery van, will face price hikes.
Then there are the intangible effects that we won't feel until much later. Japanese companies have suffered losses that go beyond production facilities. The human toll among the employees, direct loss of life, shock and grief will leave its mark. "It's very hard to quantify, maybe we see new product introductions slip," says Dubravac. "In a world where we're trying to count every little thing, some of these are broader and could be much more impactful."
But even with all of the disarray, don't start stockpiling Blu-ray players or PS3's quite yet. Retailers immediately began adjusting shelf allocation to avoid out of stocks or raising prices. "Even if we were to see component price increases it's very unlikely that would ever show up at retail," Dubravac says. "We're still in a very delicate environment for retail. It's a very competitive market and it's not going to impact entire categories, in any significant way."