Japanese electronics sector faces extended supply woes

TOKYO Wed Mar 16, 2011 9:55am EDT

A Sony logo is pictured at an electronic shop in Tokyo February 3, 2011. REUTERS/Kim Kyung-Hoon

A Sony logo is pictured at an electronic shop in Tokyo February 3, 2011.

Credit: Reuters/Kim Kyung-Hoon

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TOKYO (Reuters) - Japanese electronics manufacturers warned production would be hobbled by further supply and distribution problems as companies struggle with power blackouts after the disaster in Japan.

Canon said it would suspend production at one of its main plants in Oita, southern Japan, blaming problems with parts supply and distribution.

"News that the earthquake has disrupted the supply chain for production bases in Kyushu, a long way from the Tohoku region, will probably come as a bit of a surprise, but this shows the potential for similar disruption at other companies," Citigroup analyst Masahiro Shibano said in a note.

The Oita plant, which makes cameras, lenses and compact printers, employs 4,500 people.

Japan accounts for 14 percent of the global production of computers, consumer electronics and communications gear last year, according to IHS iSuppli.

The prospect of extended supply disruption has already pushed prices for key technology parts higher. If the supply chain is broken for even a few weeks, the impact could be felt in higher prices or shortages of gadgets such as tablets, smartphones and computers for months to come.

Nikon said the suspension of its precision equipment plants in north Japan could eventually disrupt production at factories closer to the capital, which could run out of parts. The company's factories in the Tokyo region may also be affected by the rolling power blackouts, expected to be in force the end of April.

In Tokyo, transport woes hampered operations. Sony said only 120 of its 6,000 staff were working at its main Tokyo office building Wednesday, due to management concerns over rail service disruptions.

Shares in the maker of Bravia televisions however bounced back nearly 9 percent Wednesday, after slumping 17 percent in two days following Japan's disaster, which has destroyed swathes of the northeast Japanese coast.

Shares in Panasonic were also up 7.4 percent as some firms inspected their plants and looked to resume production.

Sony said Wednesday it would re-start a plant in Kanuma, north of Tokyo, where it makes industrial adhesives and optical film, leaving 7 other plants and two research and development centers still suspended after the quake.

A Sony spokeswoman said the company was inspecting some facilities to see when production might be resumed, but was still not sure when this would be possible. One plant in Miyagi, making magnetic tape and Blu-ray disks was severely damaged by the tsunami.

Reconstruction of infrastructure from roads to rail, power and ports in the affected regions in Japan will take at least five years, experts said this week.

(Reporting by Isabel Reynolds and Tim Kelly; Editing by Joseph Radford and Anshuman Daga)

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