Japan Quake Update

By Jim Feldhan, Semico Research

Nuclear Power Situation
The damaged nuclear generating facilities continue to spiral out of control.  Not only are there three reactors damaged, now the spent fuel storage facilities are in serious trouble.  Similar to the reactors, the storage units need to be water-cooled.  The largest storage unit at the Daiichi Plant, containing 130 metric tons of nuclear material, is exposed and overheating.  The situation is dire.  Helicopters are being used to drop sea water on the reactor in a desperate attempt to cool the overheating nuclear material.

Semico recommends using the same solution that was used by Russia during the Chernobyl disaster. Japan should use the military to dump sand and boric acid over the reactors and spent fuel and then encase it in concrete.  This is a very large facility and would require an enormous amount of sand, boric acid and concrete.  However, it would appear that this is the only solution containing the radioactive material which is now exposed to the atmosphere.

The two damaged nuclear plants have created an electrical power deficit for the island.  The quicker these plants are sealed and contained, the quicker resources can be allocated to repair other parts of Japan’s infrastructure.  Japan’s electrical grid system includes ten utility companies.  Our research indicates that extra-high voltage transmission lines link the entire country from Hokkaido in the north to Kyushu in the south.   The companies work together to exchange electricity to provide power in the most efficient manner possible in order to cope with emergency situations.  These companies also take part in the cooperative development of electric power technology and the sharing of resources.

Semiconductor Industry Impact
Damage reports released in the past few days confirm our original assessment.  There are only a few semiconductor manufacturing fabs that sustained substantial damage. Texas Instrument’s fabs in Japan accounted for 10% of the company’s revenue, and within three days arrangements were already in place to cover 60% of the production output from the affected facilities.  Maxim Integrated Products reported no structural damage to its partner facility, Seiko Epson.  However, the power outage has affected production at the facility located in Sakata, Japan.  The facility provided approximately 15% of Maxim’s wafer starts last quarter.  Maxim stated that all products manufactured at the Seiko Epson facility could be manufactured at other facilities.

Consistent and reliable electric power supply is still a major issue in Japan’s return to normalcy.  Semico believes that high tech and other key industrial facilities will get high priority.

There is still concern over the material suppliers that provide wafers and other materials for both the manufacturing and packaging of semiconductor chips.  Shortages of those materials could have a broader industry impact causing bottlenecks in the production cycle worldwide.  However, the semiconductor industry is resilient and flexible.  Semico believes that in times of shortage companies will find ways to increase efficiencies and improve productivity per wafer.  In addition, alternative sources of supply will also be found.  There are many companies that are willing and able to step up to the challenge of filling the gaps as a result of this devastating disaster.