Rescue workers searching through rubble in Japan 311 R.
(photo credit: REUTERS/Lee Jae-Won)
Over the decades, Japan’s electronics industry has been a global technology
spearhead. Japan is found throughout the electronics-products food chain, on the
buyers side, among the vendors and partners, and as customers. Consequently,
most Israeli companies that target the hi-tech market are exposed to Japanese
trends, and its economic condition or a natural disaster can affect – adversely,
but sometimes also favorably – the business of Israeli companies.
has a long list of companies with ties to Japan. Most of these are engaged in
hardware, telecommunications equipment, semiconductor production equipment and
storage equipment. Some companies, especially public companies, have large sales
“Companies that rely on components manufactured in Japan are
liable to be hurt,” says Harel Hertz Investment House CEO Eran Harel. “But it is
also possible that recovery will be faster than expected.”
start-ups with direct or indirect ties to Japan include Altair Semiconductor
Ltd., Amimon Ltd. and ASOCS Ltd., all of which develop wireless
telecommunications components and have partners, customers or distributors in
Japan. Red Bend Software Ltd.
has an important Japanese cellphonecarrier
customer, NTT DoCoMo Ltd.
Among the public companies, the emphasis is on
firms that develop semiconductor production equipment, such as: Orbotech Ltd.,
Camtek Ltd. and Nova Measuring Instruments Ltd. – all of which have some level
of business in Japan. Japan accounted for 11 percent of Obtotech’s sales in
2010, or $60 million, and it accounted for 12% of Nova’s sales in 2009. The
companies say it is premature to know exactly what is happening, or how they
will be affected, if at all.
Other public companies on the supply side of
processors for electronic products include Zoran Corp. (23% of sales in Japan)
and DSP Group Inc. and telecommunications-equipment vendor Orckit Corrigent
Sapiens International NV (22% of sales from Japan).
There is nothing new
about an earthquake in Japan, and the country’s factories are built to withstand
Factories of electronics giants such as Fujitsu Ltd., Hitachi Ltd.
and Toshiba Corporation, which manufacture a substantial proportion of the
components that go into electronic products, were little damaged, if only
because of their distance from the epicenter.
In general, compared with
the large semiconductor companies, such as Intel Corporation and Samsung
Semiconductor Inc., the Japanese have not invested heavily in new production
lines over the past couple of years, resulting in low dependence of Israeli
suppliers in this industry.
The problem is that at the factories of the
Japanese electronics giants, every little delay is liable to cause strong demand
for components of which the inventory is used up, which could cause problems
along the food chain.
But there might also be a positive side. For
example, in the Flash NAND and DRAM memory-chips components sector, a shortage
in Japanese supplies could cause Korean and Taiwanese competitors to ramp up
production, leading to increased demand for production-line
Japan’s recovery effort and investment also could have
positive effects for companies that provide technologies for telecommunications