Japan supply fears hit computer companies

City A.M. Reporter
Toshiba has said an assembly line in Japan making small liquid crystal displays will be closed for a month, and PC maker Lenovo has voiced worries over parts, highlighting the threat to global supply chains from Japan's devastating earthquake.

Hitachi also said production of small LCDs will be halted at its factory near Tokyo for a month as it deals with damage and power outages stemming from last week's 9.0 magnitude earthquake.

The closures are the latest in a series of plant shutdowns by Japanese companies following the earthquake, tsunami and subsequent nuclear fallout threat, which threaten supplies of everything from semiconductors to car parts to manufacturers across the globe.

Any lengthy disruptions to regional production networks could spill over into global supply chains, potentially putting a dent in corporate profits and economic growth more broadly – worries over which have been reflected in falls in global share prices.

Toshiba's assembly line at a plant near Tokyo making LCDs for smartphones and other devices will be closed to repair sensitive equipment knocked out of alignment by the quake, a Toshiba spokeswoman said.

Another plant in Japan making small displays was undamaged, she said.

The Toshiba plant supplies the mobile phone industry and auto makers for navigation displays, and its two factories including the one still operating account for about five per cent of the global small LCD display market, said Damian Thong, an analyst at Macquarie Capital Securities in Japan.

"Given that car production in Japan is down anyway, a one-month stop in production may not be as problematic as it might seem," Thong said.

"However, given that the market for smartphones outside Japan is pretty active, supply disruptions there could cause problems for some handset makers of some models."

Chipmaker Maxim Integrated Products and Lenovo, the world's No.4 personal computer brand, joined a growing list of companies in a range of industries warning of disruptions to their production.

"In the short term there won't be much impact. We are more worried about the impact in the next quarter," Lenovo Chief Executive Yang Yuanqing told reporters in Shanghai.