SAN JOSE, Calif. – What is the overall impact of the recent earthquake in Japan?
In a report, Bill McClean, president of IC Insights Inc., provides his analysis of the situation in Japan and its effect on worldwide GDP, electronic system sales, and the worldwide semiconductor market. Here are five predications:
1. GDP to fall
''Japan represented 7.5 percent of worldwide GDP in 2010. Early estimates indicate that the earthquake and tsunami damage will cause Japan’s GDP to decline by 1-3 percent in 2011. IC Insights believes that the resulting supply chain disruptions from the earthquake could still cause worldwide GDP to drop to 3.4 percent, and still result in a $260 billion shortfall in worldwide GDP this year as compared to our original 3.9 percent forecast. IC Insights’ current worldwide GDP forecast (is) 3.6 percent.''
2. Electronic systems to take hit
''Electronic system sales were $1,237 billion in 2010, which represented only 2.2 percent of worldwide GDP. Taking the pessimistic situation of a 3.4 percent worldwide GDP growth rate in 2011, and the associated $260 billion negative impact on worldwide GDP, and multiplying it by 2.2 percent yields an electronic systems sales loss of $5.7 billion. Subtracting $5.7 billion from IC Insights’ current 2011 electronic system sales forecast of $1,348 billion would put electronic system sales at about $1,342 billion for this year, an 8.5 percent increase over 2010 compared to our current forecast of 9.0 percent.''
3. No change in IC forecast
''Using the ‘pessimistic’ scenario (i.e., 3.4 percent worldwide GDP and a loss of $5.7 billion in electronic system sales) and subtracting $1.4 billion from IC Insights’ current 2011 forecast of $346.8 billion for the worldwide semiconductor market, puts the worldwide semiconductor market at $345.4 billion, still a 10 percent increase over 2010.''
4. Supply chain questions
''IC Insights believes that current levels of inventory of (silicon) wafers and packaging materials will help to avert serious shortages. Also, materials facilities (e.g., raw wafers, plastic resin, etc.) can ftentimes be brought back on-line much quicker than IC fabs. IC Insights expects that over the next six months, many electronic system producers will attempt to acquire extra IC inventory, especially in anticipation of the seasonally strong second half of the year.''
5. Net impact?
''In the final analysis, there is no doubt that supply will be constrained in numerous areas relating to the electronic system and semiconductor industries due to the earthquake and tsunami in Japan. However, on a worldwide basis, demand for electronic systems and semiconductors is expected to be only slightly lessened due to the disaster in Japan. Moreover, any lessening of system or semiconductor demand in 2011 due to the earthquake is forecast to be delayed and pushed into 2012, but not destroyed.’’
I agree, Selinz. It seems there is no way of knowing how long the rolling blackouts are going to last at this point. What could be quick solutions to recover power for the electronics companies, I wonder?
What's the danger of the contamination getting into the packaging resin? Clean rooms also need clean air and water. How will this affect IC production?
The drinking water in Toyko is unsafe for children. What's the affect on GDP of having to abandon the northeast areas like Ukraine after Chernobyl?
Are we looking at this situation with rose colored glasses? The Japanese seem to be incapable of bringing the reactors under control. This looks more and more like Chernobyl in slow motion.
Praying for the best.
It looks like they are virtually operating blind. The radioactivity of the surrounding water needs to be monitored continuously by nearby nations.
In today's newspaper, in India ( Specifically the local newspaper in Pune) there is indeed a news report which says that Japan has issued a MAXIMUM DANGER alert, as the some plutonium is found in the ground near Fukushima Reactor. It is likely that the 20km area surrounding this plant may need to be evacuated. The situation looks to be really grim there and much worse than the earthquake itself or associated Tsunami. The radiation effects will be long term and long range with contamination spreading through air & water.
In today's morning news here in India the headline is about the situation in Fukushima plant getting worsened further. The authorities are guessing that 70% of fuel rods at No.1 and 33% at No.2 reactor could be damaged. The European Union's energy chief Guenther Oettinger warned of catastrophic events within a matter of hours.
Hope the brave engineers risking their life at the plant can bring it back to a controllable state. But the fear is that the short term and long term effect of this incident might look worse.
I have seen other media reports about the effect on the world's GDP due to the effect of these disasters. The headline always sounds ominous -- "worldwide GDP to drop to 3.4 percent" -- without putting it into context.
Japan is 7.5% of worldwide GDP and is expected to fall 1-3% as a result of this. Multiply those numbers and discover that worldwide GDP will only be affected by a tenth of a percent or two.
The Japanese economy will suffer a significant blow this year, but to the world economy, it's more like a speed bump. Try to keep the perspective on who is truly impacted by this crisis vs those who are merely inconvenienced.
Join our online Radio Show on Friday 11th July starting at 2:00pm Eastern, when EETimes editor of all things fun and interesting, Max Maxfield, and embedded systems expert, Jack Ganssle, will debate as to just what is, and is not, and embedded system.