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Digitimes Insight: Rolling black-outs to hit Japan-based LCD TV vendors
Jessie Lin, DIGITIMES Research, Taipei [Wednesday 16 March 2011]

Production of Japan-based major LCD TV vendors such as Sony, Toshiba, Panasonic and Sharp will not be significantly affected by the 9.0 magnitude earthquake and tsunami that struck off the northeast coast of Japan on March 11, as their TV assembly plants are not located in the disaster areas. The four Japan-based vendors are expected to account for 35.6% of the global LCD TV market in 2011.

In terms of upstream component supply, Sony and Toshiba mainly adopt in-house image processing chips for their high-end models. Sony's production plant for image processing chip is located in Nagasaki, which was not significantly affected by the disaster. Meanwhile, Toshiba's image processing chip plant was more seriously damaged compared to its IC chip production plant.

Digitimes Research believes that with for mid-range to entry-level LCD TV models, which Japan vendors mainly outsource to overseas manufacturers, image processing chips will not be an issue.

For other components, the disaster will affect some supply of TAC and color filters. Liquid crystal supplier Chisso, which accounts for 20-30% of the global market, will see some of its shipments affected due to a fire at a nearby oil refinery plant. With Hitachi Chemical and Sony accounting for 90% of ACF supply worldwide, significant impact on the global LCD display industry is expected.

Overall, as Japan-based LCD TV vendors all run overseas production plants and will outsource over 70% of their production in 2011, Digitimes Research expects Japan vendors to shift more of their production to overseas plants or further increase outsourcing if the rolling black-outs hinder their production in Japan.

Tokyo Electric Power Company (TEPCO) started rolling black-outs on March 15 due to power shortages in the wake of the disaster. TEPCO has separated Tokyo, Chiba, Kanagawa, Saitama, Ibaraki, Shizuoka, Tochigi, Gunma and Yamanashi prefectures into five sections, and each section takes turns to have power cut for three hours. The rolling black-outs is expected to continue until the end of April. Part of the power of TEPCO is supplied by the Fukushima Daiichi nuclear power plant, which was seriously damaged by the tsunami caused by the earthquake. In addition to TEPCO, Tohoku Electric Power has also started rolling black-outs and is expected to continue for a month.

Sony

Plants in the Miyagi prefecture were suspended either due to tsunami or power outage caused by the earthquake. The plants in Miyagi are mainly for optical film, magnetic tape and magnetic head production.

Equipment at the Kanuma plant in Tochigi prefecture was not damaged by the disaster but suspended operation due to lack of power in the disaster area. The Inazawa TV assembly plant in Aichi prefecture is far away from the disaster area and was not affected by the earthquake.

TV chip (Bravia engine) production is located in Nagasaki, far away from the disaster area and production has not been affected.

Toshiba

Toshiba announced on March 15 to suspend production at its TV production plant in Saitama prefecture in response to the rolling black-outs. Several production and semiconductor facilities in Kanagawa prefecture will also suspend production in response to the rolling black-outs.

Its production plant in Iwate prefecture was hit by power outage and damage to factory buildings. The plant regained partial power supply on March 13, but operation remains suspended. The plant is mainly for CCD, CMOS and image processing analog IC production.

Production of LSI logic circuit and analog IC in Oita prefecture is far away from the disaster area and has not been affected.

Panasonic

Although no one is allowed to enter its Sendai and Fukushima plants due to aftershocks, the damage will not affect Panasonic's TV business as the Sendai and Fukushima plants mainly focus on networking business.

Its Utsunomiya plant was not damaged by the earthquake but is within the rolling black-out area and will suspend production in response to the rolling black-outs. The Utsunomiya plant is mainly for image and display business.

Sharp

The Yaita plant in Tochigi prefecture was suspended until March 14, and is facing rolling black-outs after resuming operation. The Yaita plant is mainly for small- to medium-size TV assembly business.

With the Kameyama and Sakai plants being far away from the disaster area, neither the earthquake nor the following rolling black-outs have any impact to their production. The Kameyama plant is a TV assembly plant, and the one at Sakai is for LCD panel production.

Impacts of the March 11 earthquake on the supply chain of Japan's LCD TV vendors

Vendor

TV assembly plants

Image processing chip

LCD panel

Other components

Sony

Located in Aichi prefecture; unaffected by the quake

Sony and Toshiba mainly adopt in-house produced image processing chips for high-end TV models.


Sony's image processing chip plant in Nagasaki unaffected by the quake.


Toshiba's image processing chip production plant damaged.

Only Panasonic's 6G plant impacted by quake

Some impact on TAC and color filter supply.


Fire at nearby oil refinery affecting liquid crystal supply from Chisso.


Significant impact on global ACF supply expected.

Toshiba

Plant in Saitama prefecture in rolling black-out zone

Panasonic

Utsunomiya plant in rolling black-out zone

Sharp

Production at Yaita plant in Tochigi prefecture suspended till March 14; affected by rolling black-outs.


Kameyama plant unaffected by the earthquake or rolling black-outs

Source: Companies, compiled by Digitimes, March 2011

Nikkei: Sales ratio of TEPCO by industry

Total power per hour

Industry

Ratio

82.6 million kilowatt

Food

7%

Paper

3%

Railway

8%

Chemical

12%

Non-ferrous metals

5%

Steel

9%

Machinery (including automobiles)

22%

Others

34%

Source: Nikkei, compiled by Digitimes, March 2011

Global assembly plants of Japan-based TV vendors

Vendor

Asia

Europe

America

Sharp

China, Japan, Malaysia

Poland, Spain

Mexico

Sony

China, Japan, Malaysia

-

Brazil

Panasonic

China, Japan, Malaysia, India

Czech Republic, Russia

Mexico, Brazil

Toshiba

China, Japan, Indonesia

Poland

Mexico

Source: Companies, compiled by Digitimes, March 2011

LCD TV production in Japan

Source: Digitimes Research, March 2011

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