April 11, 2011

Sharp Suspends LCD Plants after Japan Earthquake


Japan’s LCD panel industry is among the many to take a literal hit after the natural disasters that occurred in Japan last month.

Sharp (News - Alert) announced this week that it is halting production of LCD panels at two of its plants until “better times.” According to Reuters, the plants will be quiet at least until May thanks to a slump in domestic demand for televisions and shortages of a gas used in panel production.

The report did not specify what kind of gases were involved, but disruptions across the supply chain have hit manufacturers all over Japan in the wake of the quake-tsunami.

Spokeswoman Miyuki Nakayama says the company has decided to focus on making smaller panels – under 10 inches –because it has a stockpile of larger ones. Nakayama said that production had already halted at the two factories in Japan where the bigger panels are made.

Corning said it plans to maintain production levels at its Shizuoka and Sakai City LCD glass facilities in Japan despite its customer Sharp's temporary production curtailment of LCD panels.

“Sharp has informed us they are significantly curtailing operations at their Gen 8 and Gen 10 panel making facilities for a period of time. We intend to continue to maintain our own production levels at both of our Japan manufacturing facilities to replenish LCD glass inventories and provide glass to other geographic regions,” said James B. Flaws, vice chairman and chief financial officer. “The decision by Sharp has no impact on our Corning (News - Alert) Gorilla Glass operations in Japan. Demand for Gorilla Glass continues to be very strong.”

Sharp fell in Tokyo trading on concern the halt will erode earnings. The Osaka-based company may lose 50 billion yen ($590 million) in revenue and 15 billion yen in operating profit this fiscal year because of the suspension, according to estimates by Yoshiharu Izumi, an analyst at JPMorgan Chase & Co. (JPM) in Tokyo.

Despite contingency plans, concerns surrounding the recent disasters in Japan rely on the fact that Japan is responsible for one-fifth of the world’s semiconductor production—the reason the earthquake and tsunami has threatened supply manufacturers worldwide. Now analysts are expecting the prices of consumer electronics to rise significantly.

Reuters recently reported that companies such as Ericsson (News - Alert), Alcatel-Lucent  and STMicroelectronics have sent warnings for supply impact, going down the same road of worry as the auto industry, as Japan is a major supply source for the auto and technology industries.


Michelle Amodio is a TMCnet contributor. She has helped promote companies and groups in all industries, from technology to banking to professional roller derby. She holds a bachelor's degree in Writing from Endicott College and currently works in marketing, journalism, and public relations as a freelancer.

Edited by Janice McDuffee
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