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Quake teaches powerful lessons to chip industry

Posted: 29 Mar 2011 ?? ?Print Version ?Bookmark and Share

Keywords:supply chain? Japan earthquake? earthquake's impact? semiconductor industry?

The past several weeks have seen experts thoroughly discussing and analyzing the ill effects of the March 11 Japan earthquake and tsunami on the semiconductor industry. Inarguably, the disaster has proven to be disruptive to the industry, specifically to those involved in supply chain management, in the weeks following the quake. Historically, however, supply chain disruptions do not last throughout the year. NAND flash prices rose on March 14, but were stabilizing by the end of that week.

Dan Hutcheson

Dan Hutchenson

As big as the quake was, the root of the current supply problems is actually the lack of planning and preparation on the part of Japan's power industry. To be more specific, utilities are being accused of regulatory oversight, political payoffs and poor choice of location.

Date

Location

Mag.

Recovery comments

October 1989

Loma Prieta

6.9

Fabs up in less than 2 weeks

Jan 1995

Great Hanshin

6.8

Fabs up in less than 2 weeks

Sept 1999

Taiwan Chi-Chi

7.7

Low preparedness; took 1-4 months

Mar 2011

Sendai

9.0

Tsunami and low preparedness of power industry

Source: VLSI Research

The most important lesson to be learned from this disaster is that recovery largely depends on how efficient and meticulous a company had been in choosing a location for and building a fab, as well as on safety processes and procedures currently in place. What made Taiwan's Chi-Chi earthquake so devastating was the absence of simple processes such as tying tools down and double containment of gases and chemicals. If the same earthquake were to happen today, Taiwan would come out far better. The quake was severe, but the vibration had largely dissipated by the time it hit the semiconductor production areas.

USGS shake map

While the Sendai earthquake was one of the worst in history and ranks first in big shakers for the semiconductor industry, its adverse effects were limited because it was so far out to sea. Contrast the USGS shake map for Sendai against that for the Loma Prieta earthquake. In the areas where the closest fabs were, Loma Prieta's effects were more severe. Toshiba's NAND flash fabs, on the other hand, were way down past the green zone on the chart, thus explaining why they sustained little damage and recovered on the same day of the quake.

Sendai and Loma Prieta

The tsunami did not impact most of Japan's semiconductor production. Still, its chip industry must contend with two key challengespower and transportation. A fab covered by the government-mandated three-hour rolling blackouts certainly cannot operate normally and continuously. Moreover, Japan's rail systems run on electricity and train schedulers certainly did not make plans or provisions for such an event.

The need to plan for disruptions cannot be ignored. A case in point is Toshiba's flash fabs, which have been able to secure uninterrupted power and have thus resumed operations. It is always wise to have your own source of power, or at a minimum, an exemption similar to what hospitals get whereby power cannot be shut down. Another example is Globalfoundries' Dresden fab, which was built with a co-generation plant. The facility paid for itself by selling power back into the grid during peak hours, just like a homeowner does with solar panels. When a flood took out the local power plant, the fab went right on, virtually uninterrupted.


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