Second Magnitude-7 Quake in a Decade Revives Kumamoto Supply-Chain Risk

Sony, Renesas Halt Production

TSMC Continues Equipment Checks and Adjustments

Liquefaction and Ground Subsidence Hit Yatsushiro Port

Fears Grow Over Disruptions to Semiconductor Material Shipments

A magnitude-7 earthquake struck Kumamoto Prefecture on Japan’s Kyushu island for the second time in a decade, renewing concerns over the vulnerability of the region’s concentrated semiconductor and auto manufacturing belt. Damage has also been confirmed at key infrastructure including ports, raising fears that supply-chain disruptions could drag on. The Japanese government warned that another major quake remains possible, saying part of the fault zone has yet to rupture.

Chip Plants Shut for a Third Day

A number of semiconductor- and auto-related companies in the Kumamoto area have suspended factory operations for a third day after the July 28 earthquake, the Yomiuri Shimbun and Nikkei reported on July 30.

Sony Semiconductor Solutions, a unit of Sony Group, halted operations at its image-sensor plant in Kikuyo, Kumamoto Prefecture. After the 2016 Kumamoto earthquake, it took three months for all processes to resume.

Renesas Electronics also suspended operations at its Kawashiri and Nishiki plants, which produce automotive semiconductors and other products. TSMC’s first Kumamoto fab has resumed production, but the company is continuing inspections and adjustments to manufacturing equipment because of the severity of the shaking. It said calibrating the equipment will take considerable time.

Semiconductor plants make microscopic circuits through hundreds of processing steps. It usually takes about three months from wafer input to shipment, and products must be scrapped if even minor defects emerge during production. Even when buildings suffer little structural damage, recovery can take time because equipment precision must be reset and product quality verified.

Key infrastructure used to transport semiconductor raw materials was also damaged. Japan’s Ministry of Land, Infrastructure, Transport and Tourism said Yatsushiro Port in Kumamoto Prefecture suffered liquefaction, cracking and ground subsidence.

The city of Yatsushiro said the port is the only one in southern Kyushu able to handle hazardous cargo such as high-pressure gas and chemicals essential to semiconductor manufacturing. Nippon Express Holdings, which handles logistics operations at the port, said repairs could take a long time.

Water, Land and Supply Chains Helped Kyushu Become ‘Silicon Island’

Japanese companies chose Kyushu despite earthquake risk because they judged the region’s advantages — abundant water, ample land, industrial workers, customers and supply chains — to outweigh the threat from natural disasters. No part of Japan is entirely free of that risk.

Kumamoto has abundant groundwater formed as rainfall around Mount Aso passes through volcanic strata. That makes it well suited to semiconductor production, which requires massive amounts of ultrapure water.

Those advantages drew Japanese electronics makers to Kyushu from the 1960s onward, giving rise to the region’s nickname, “Silicon Island.” More recently, TSMC’s entry has made the area a symbol of Japan’s push to rebuild its semiconductor industry.

The auto industry followed a similar path. As Nissan Motor, Toyota Motor and Daihatsu Motor established production bases in the region, parts suppliers clustered nearby, accelerating industrial concentration. Easy access to exports through ports and proximity to Asian markets including South Korea, China and Taiwan also added to Kyushu’s appeal.

But another major earthquake, following the 2016 disaster, is again underscoring the risk that industrial concentration can raise efficiency in normal times only to become a supply-chain vulnerability in a disaster. A shutdown at a single factory or port can spread quickly across multiple companies and industries.

Kumamoto Castle Damaged Again as Officials Warn of Unruptured Fault Segment

Kumamoto Prefecture’s tourism industry also faces a blow after fresh damage to Kumamoto Castle, the region’s 400-year-old landmark. The Kumamoto Castle General Office said at least 28 locations inside the castle were damaged in the latest quake.

Kumamoto Castle is considered one of Japan’s three great castles, along with Nagoya Castle, Osaka Castle and Himeji Castle. It was completed by Kato Kiyomasa, the Japanese warlord who invaded Korea during the Imjin War and captured Princes Imhae and Sunhwa, sons of King Seonjo. The castle had already been undergoing long-term restoration after stone walls and parts of the main keep roof collapsed in the 2016 earthquake. It was struck again before that work was finished.

Japan’s Earthquake Research Committee also raised the possibility of another major quake. Chairman Kazushige Obara told reporters that part of the fault in the Kumamoto area remains unruptured and still has ample potential to trigger a future earthquake.

The committee estimates the probability of a magnitude-7.3 earthquake in the Yatsushiro Sea area within the next 30 years at as high as 16%. It has assigned the risk its highest S rating.

Choi Man-su, Tokyo correspondent, Korea Economic Daily, bebop@hankyung.com