The earthquake in Japan triggered concerns about the shortage of raw materials for various electronic devices. Although still facing great risks, with the resumption of production soon, we believe that the industry's worst scenario assumptions should not appear. However, there is no clear timetable for the re-production of silicon wafers (especially 300 mm silicon wafers). Shin-Etsu Semiconductor (a wholly-owned subsidiary of Shin-Etsu Chemical), Shirakawa Plant, SUMCO Yonezawa Plant, and MEMC Utsunomiya Plant have all stopped production. We think the production capacity of these three factories is equivalent to about 25% of the global production capacity.
Baihe Plant and Utsunomiya Factory will have little impact if shipments are resumed in May.
The Yonezawa plant appears to be relatively small, and we expect the plant to be able to resume delivery in May at the latest. If SUMCO can quickly activate its idle Imari plant capacity, and the Baihe and Utsunomiya plants also resume shipments in May and fully resume production in August, we believe that the total inventory of manufacturers and customers should be maintained at one Above the month, it is expected to return to normal in early 2012.
If the recovery of production capacity of both plants lags behind, there will be tight supply.
If both Baihe Factory and Utsunomiya Factory resume shipments in July and fully resume production within the next three months, we believe that the total inventory of manufacturers and customers will fall within one month, and supply will continue until the end of the year. If shipments are postponed to September, the inventory of manufacturers and customers will fall to about half a month, which means that some customers will not be able to obtain the amount of silicon they need.
The main assumptions: shipments resumed in May; power cuts and aftershocks remain worrying.
Most of the electronics raw materials factories that were discontinued due to the earthquake may resume production in May, so wafer production may resume in May. However, due to the higher magnitude of the earthquake, we believe that the measures of power curtailment and aftershocks may still interfere with production.
The current situation is detrimental to Shin-Etsu Chemical, but we believe the impact is limited because the contribution rate of silicon wafers to its earnings is only about 25%. SUMCO should benefit from the early resumption of production at the Yonezawa plant and the smooth opening of idle capacity at the Imari plant. However, we think SUMCO's current stock price is overvalued.
Baihe Plant and Utsunomiya Factory will have little impact if shipments are resumed in May.
The Yonezawa plant appears to be relatively small, and we expect the plant to be able to resume delivery in May at the latest. If SUMCO can quickly activate its idle Imari plant capacity, and the Baihe and Utsunomiya plants also resume shipments in May and fully resume production in August, we believe that the total inventory of manufacturers and customers should be maintained at one Above the month, it is expected to return to normal in early 2012.
If the recovery of production capacity of both plants lags behind, there will be tight supply.
If both Baihe Factory and Utsunomiya Factory resume shipments in July and fully resume production within the next three months, we believe that the total inventory of manufacturers and customers will fall within one month, and supply will continue until the end of the year. If shipments are postponed to September, the inventory of manufacturers and customers will fall to about half a month, which means that some customers will not be able to obtain the amount of silicon they need.
The main assumptions: shipments resumed in May; power cuts and aftershocks remain worrying.
Most of the electronics raw materials factories that were discontinued due to the earthquake may resume production in May, so wafer production may resume in May. However, due to the higher magnitude of the earthquake, we believe that the measures of power curtailment and aftershocks may still interfere with production.
The current situation is detrimental to Shin-Etsu Chemical, but we believe the impact is limited because the contribution rate of silicon wafers to its earnings is only about 25%. SUMCO should benefit from the early resumption of production at the Yonezawa plant and the smooth opening of idle capacity at the Imari plant. However, we think SUMCO's current stock price is overvalued.
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