40 Trillion Yen Loss from Broken Global Supply Network - the Japan Disaster

Osaka - Tuesday, April 12, 2011



Nikkei, Japan’s leading newspaper specialized in business and economy reported on April 9 that the Japanese government estimated the loss from the broken link of global supply network attributing to the Japan disaster to reach 40 trillion yen worldwide.



1. How did the Japanese government estimate the loss?



METI (Ministry of Economy, Trade and Industry) initiated to urgently investigate the negative effect of stagnation of production of components and materials of growth industries by performing survey regarding the worldwide production loss and possibility of the damage to Japan such as switching suppliers from Japan to other countries in the end of March.



The government estimated the loss based on the assumption that production of semiconductor related components are halted from the middle of March to the end of April. And the conclusion is that production and services equivalent to in total approximately 40 trillion yen will be negatively affected worldwide.



2. What are the examples of such losses?






1) Microcomputer



This is inevitable for controlling driving of cars. If the plants and other sites of the leader of this component production and supply based in Miyagi prefecture called Renesas Electronics should stop operating for 1-1/2 months it is possible that it leads to approximately 6.5 trillion yen loss of worldwide automobile production. It also could mean loss of flat panel TV production loss of 400 billion yen.



2) Silicon Wafer



This is the main material for semiconductors. The worldwide leader is Shin-Etsu Chemical and if its affiliate plant in Fukushima prefecture has damaged and its recovery is still unknown. If the production of the plant should stop for 1-1/2 months it is estimated that it leads to approximately 1/5 trillion yen loss in worldwide semiconductor production. It would also lead to decrease in sales of services of telecommunication, the Internet and broadcasting totaling approximately 30 trillion yen.



3) Smartphone



Japan has been enjoying market share of approximately 70% for LCD panel for smart phones but it is possible that sufficient production cannot be done and the conclusion from the hearing is that worldwide smart phone manufacturers may switch to LCD panel makers in other countries, meaning decrease in the market share that Japan has been enjoying.