Silicon Valley waits to see fallout from Japan quake

March 11, 2011 7:42:12 PM PST
Japan's massive quake is causing ripples in the high tech world, including companies in the Silicon Valley.

Intel says its 600 employees are safe, same for Google. Both companies say damage is not significant. Microsoft, Sony and Panasonic are still assessing damages. One Sony factory in Miyagi was hit by the tsunami and the ground floor flooded.

An industry analyst in San Jose says the biggest impact will be felt in chip manufacturing.

"The county as a whole produces somewhere on the order of 30-40 percent of the total world consumption of semiconductors right on the island," Jim Handy said.

Particularly, Japan is responsible for production of the NAND flash memory chips used to for storage of photos in cameras and cell phones and music in iPods and mp3 players. Handy says consumers will see a shortage.

"The shortage would really hit in April and May," Handy said.

But Friday afternoon, the SanDisk and Toshiba plant on the south side of Tokyo reported it is already back in production. With that kind of turnaround Handy says it is unlikely any short term shortage would drive up prices of cameras phones and computers, unless the damage is much worse than originally thought.

"It's a little too early to tell, we've still got semi conductor manufacturers looking at their plants just trying to tell how much it's going to take to bring them up and running," Handy said.

As for the impact on Silicon Valley as a whole, technology analyst Larry Magid says there is no question the economic impact of the quake will be felt in the Bay Area. Some companies will benefit, others will be hurt and it will be days, maybe weeks before that is sorted out.

"There will be some situations where American companies can fill in the gap, but most of the situation is we depend on Japan for parts and I think it's really bad news for Silicon Valley but not devastating news," Magid said.

The president and CEO of Joint Venture Silicon Valley says the real take away from this quake should be, "What if it happened here?"

"It's mixed news, frankly, on the one hand we have superb service providers first responders, might be the world's best," Russell Hancock said.

But the bad news, says Hancock, is the disaster planning has been done city by city, without a regional plan.

Hancock's hope is that the South Bay will learn from this disaster in Japan and begin working on a regional plan. He is convinced a quake on the same magnitude, roughly 100 times stronger than Loma Prieta, is coming.

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