Natural Disasters Create Potential for Further Tightening of Glass Supply
A series of natural disasters have hit Asia over the past week, with multiple typhoons and earthquakes hitting Japan, Taiwan and China. Such events are always closely watched for their potential impact on the display supply chain, but with an on-going glass substrate shortage, that segment of the supply chain is of particular concern.
First, Typhoon Morakot hit Taiwan on August 7, dumping at least two meters of rain. This caused widespread flooding and power outages in southern Taiwan, including the area around Tainan. Although Tainan Science Park-where Corning has production-was not flooded, there is water rationing in Tainan County. Similar concerns exist in Yulin County, where Asahi Glass has a plant. Electrical power is also an issue; it is believed that AvanStrate suffered a power outage that caused production to go off-line.
On August 10, an earthquake hit Shizuoka prefecture in Japan, the location of Corning’s Kagegawa glass factory. This caused physical damage as well as causing a fire. It is believed that as many as four tanks have been shut down as a result. Any severe disruption of production at this plant could have an impact on Sharp’s LCD production at its Kameyama plant.
The impact of these disasters on the display supply chain is not yet clear. Reallocation of glass supply is very sensitive, since glass makers have various levels of relationships (contractual or otherwise) with their customers. However, if glass makers have to shift their allocations among Korea, Taiwan and Japan due to obligations, the glass tightness could spread wider.
With Taiwan panel makers already constrained by glass supply, any disruption of glass production in Taiwan or reallocation from Taiwan to Japan could have an impact on their ability to reach full capacity.
There are different scenarios for reallocation. Corning could utilize some glass produced outside of Japan to minimize the disruption to Sharp. If it were to come from Taiwan, it would further tighten supply there. If it came from Samsung Corning Precision in Korea, it would likely have an impact on LG Display. Of course, other glass suppliers could reallocate capacity, but they would face some of the same challenges in terms of obligations to existing customers. Samsung is the only panel maker that can be said to have an internal glass supplier, and is thus well protected from any reallocation.
This article doesn’t tell us anything at all–only that there “might” be a change in the glass supply. Furthermore, it’s written four days after Typhoon Morakot which is ample time to have done an analysis on whether or not there is an actual disruption–a few phone calls could have cleared this up.
This just seems like an attempt by a writer to finish one of their required pieces.