With the Japan government implementing power brownout policy on March 14, Japan-based polycrystalline silicon (poly-Si) and silicon wafer makers may be forced to stop their production for one month. Since most of these capacities are supplied to the semiconductor industry and poly-Si capacity in Europe and the US are all booked, the related semiconductor players may soon be out of poly-Si supply, according to industry sources.

The power brownout will also disrupt manufacturers outside of northeast Japan, especially upstream material production such as poly-Si, which is a time-intensive process, and ingot production is the same.

Japan-based poly-Si supplier M.Setek, located in the Sendai region, mostly produces for the solar sector. Tokuyamoa, Mitsubishi Chemicals, Sumitomo Chemical and Shin-Etsu provide materials for the semiconductor sector. Shin-Etsu reportedly has already halted production, and the other chemical engineering companies should see decreased output.

With other international material supplies such as Hemlock, REC, Wacker and MEMC all running at full capacity, companies that rely on Japan-based suppliers for materials will have a difficult time transferring orders.

As for wafer production, the power brownout will have the same impact on manufacturing lines. Northeast Japan is an important area for the semiconductor supply chain. Wafer demand within Japan in the near term is expected to decrease, but semiconductor companies outside of Japan could see more business due to order transfers.