Nokia sees shortages as some Japan plants restart

Reuters News
Posted: Mar 21, 2011 5:29 PM
Nokia sees shortages as some Japan plants restart

By Isabel Reynolds and Jussi Rosendahl

TOKYO/HELSINKI (Reuters) - Nokia faces shortages of some phones due to disruption caused by Japan's devastating earthquake, although the mobile phone maker said the impact on earnings would be limited.

Nokia's warning came after more positive news from Japan, with Sony saying it would partially restart a lithium ion battery plant in Tochigi prefecture on Tuesday.

That leaves six other Sony sites, making a range of devices from integrated circuit cards to Blu-ray discs, still closed.

The consumer electronics giant is one of dozens of Japanese companies to shut factories and slash output following the March 11 earthquake and tsunami which disrupted supplies.

This has been felt by Nokia, the world's biggest mobile phone maker by volume. Some 12 percent of its components are sourced in yen but Japanese components are likely to represent a larger share due to a recent renegotiation of supply contracts.

"Nokia is in a difficult enough position as it is. The sheer number of phones it sells means it is likely more vulnerable to unexpected disruptions to component supply than rivals," Ben Wood, head of research at CCS Insight, said on Monday.

Nissan Motor, Japan's No.2 automaker, restarted limited operations at five plants in Japan on Monday, with vehicle production expected to start later in the week.

Japan is reeling from a humanitarian and nuclear crisis after a 9.0 magnitude earthquake and tsunami. The country is a key supplier to the global auto and technology industries.

Nissan said it would resume production of repair parts and parts for overseas manufacturing at its Oppama, Tochigi, Yokohama, Kyushu and Nissan Shatai plants.

Vehicle production is planned to start on Thursday and will continue while supplies last, it said.

Restoration of its Iwaki engine plant, in northern Japan, is expected to take longer than the other plants, it said.

Nissan makes about 22 percent of its vehicles in Japan. Goldman Sachs has estimated the profit impact for stopping production to be about 2 billion yen ($25 million) a day.

Also in the auto sector, Swedish group Autoliv, the world's biggest maker of airbags and seatbelts, said it expected most of its suppliers and customers in Japan to resume production during the course of this week.

"We are moving in the right direction," Mats Odman said. "But one should remember that all (production) lines may not get moving just because they reopen a plant."

Toshiba said on Monday output was still halted at a factory in Iwate prefecture making system LSI chips for microprocessors and image sensors. It has begun work to bring the factory back on line, but has no timeframe to resume output.

Toshiba said an assembly line at a plant in Japan making small liquid crystal displays for smartphones and other devices will be closed for a month to repair damaged machinery.

Sony is not sure when its plants will resume operations. Some of the plants' output is supplied to other manufacturers, including customers overseas.

Renesas, the world's No.5 chipmaker, has halted operations at eight of its facilities and is also unsure when production will resume. The company said it was unlikely to start some of its plants until the threat of power cuts, expected to last until the end of April, diminished.

(Additional reporting by David Dolan in TOKYO, Helena Soderpalm in STOCKHOLM and Tarmo Virki in HELSINKI; Writing by Lincoln Feast and Alexander Smith, Editing by Ian Geoghegan and Dan Lalor)

($1 = 80.610 yen)