I am often asked how SiTime and the quartz industry are doing after the Japanese earthquake, tsunami, and nuclear accident. SiTime is completely unhurt. We quickly checked our suppliers after the earthquake and found no impact. Over the two months since we have reaffirmed that zero of our supplies are affected.
That is not the case for the quartz industry. The industry is concentrated in Japan and has seen extensive disruptions. Many of their factories were damaged and require repair. One large quartz oscillator factory is in the nuclear exclusion zone and may not be reopened. Thankfully there is little reported loss of life.
In addition to the direct damage from shaking, water, and fallout, the quartz industry is reliant on stable electrical power. Growing crystals requires months of stable autoclave time, ceramic packages require firing in kilns, and IC’s require precisely controlled fabs. Power shortages in Japan have thus caused widespread problems, far beyond the geographic limits of the physical damage.
How will this play out over the next year? The wise answer is that it is too early to know, but we have seen the start of it. The quartz industry has long lead times for some materials, and because of that they carry large strategic inventories. Therefore disruptions may not be evident for months. Customers buying quartz crystals and oscillators may think their supplies are assured, after all it has been two months since the earthquake, but shortages may still develop.
After learning that SiTime is unaffected by the earthquake, people often want to know if we are seeing a surge in orders. In the two weeks after the earthquake many customers wanted to know if we could cover for quartz oscillator shortages—which of course we can. Recently we have begun seeing increases in production orders. Our large customers have good visibility into their quartz suppliers and are shifting more of their consumption to MEMS Oscillators. It’s not a panic; it is more of a balancing of lead times and hedging of supply risk.
So how have SiTime and the quartz industry weathered the Japanese earthquake? SiTime is perfectly fine. The quartz industry has some problems, and the extent of those problems will not be known for a few more months. Large customers with supplier visibility are moving production incrementally from quartz to MEMS.
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