Under the influence of ultra-strong yen and the Great East Japan Earthquake, noticeably more semiconductor manufacturers in Japan are planning to close fabs or reduce the number of their fabrication lines. Renesas Semiconductor, for example, is planning to close its Ome Plant in 2012. Likewise, ON Semiconductor plans to close Aizu Fab in 2012, and also will consolidate into its Niigata Plant the acquired Gunma and Gifu Fabs from Sanyo Semiconductor. Panasonic Semiconductor is planning to downscale its fabrication lines at three production bases in Arai (Niigata Prefecture), Uozu and Tonami (Toyama Prefecture), while Toshiba will shut down production at its three bases located in Kita Kyushu (Fukuoka Prefecture), Hamaoka (Shizuoka Prefecture) and Mobara (Chiba Prefecture) sometime in the first half of 2012. This movement is likely to be more accelerated from now on.

According to the statistics of the Ministry of Economy, Trade and Industry, the production of Japanese semiconductor integrated circuits amounted to a total of 28.196 billion pieces for the period of January-September, 2011, down by 4.2% which was valued at 1.5317 trillion down by 20.3%, compared with the year-earlier period. If this trend still goes on at the current level, a year-round output is anticipated to go down to the same level as in 2008 when we suffered the Lehman Shock. Although there is a reaction to the higher level in the previous year, Japanese semiconductor device fabricators are suffering from the squeezed management with the severe background of ultra-strong yen.

Furthermore, the Great East Japan Earthquake attacked semiconductor plants in the Tohoku and northern Kanto regions. Renesas Naka Semiconductor, above all, suffered the most serious damages in the disaster, which enormously affected their fabrication and supply of semiconductors to the car electronics industry. From the beginning of this year, the semiconductor industry entered into an inventory adjustment stage mainly on memory on a global basis, leading to the considerable drop of operation rate in the summer season. In Korea and Taiwan on the other hand,their production has recovered since November. As there was a steady increase in receipt of orders for devices during the first half of this year owing to the good performance in their capital investment there last year, there was a solid belief that we could continue to expect a satisfactory amount of investment also in this year.

Unexpectedly, however, the number of orders rapidly decreased and planned projects were downscaled or postponed one after another. Nevertheless, Korea and Taiwan are moving toward recovery for large-scaled investments to be implemented from the end of this year to early next year. We now can clearly see a new trend that lots of change will take place for just a short term soon. This prospective trend has been brought from the recent diversification in user’s demand for semiconductor integrated circuits from personal computers to car electronics, cell phones, smart phones and other extended applications. We can say that sales performance of end products are directly reflected in the business.

Due to highly appreciating yen and effects of the Great East Japan Earthquake, closings of silicon semiconductor plants and shrinking of production lines for these have been becoming outstanding.