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.’’