Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Japanese factory output fell more than anticipated in February due to a decline in auto, electrical machinery and telecommunication equipment productions amidst a huge shortage of semiconductors and chips required in manufacturing.  


On Wednesday, Japanese government data from the Ministry of Economy, Trade and Industry (METI) showed that factory output in February contracted by 2.1pc from the previous month. Factory output had expanded 4.3pc in January. Projections based on manufacturers surveyed by the Ministry of Economy, Trade and Industry (METI) indicate output could drop another 1.9pc in March, followed by a 9.3pc rebound in April.


The Japanese economy is on a very slow recovery path post-COVID-19 pandemic and the additional drop in factory output worries industry experts.  


On February 13, the country’s eastern coast recorded an earthquake a magnitude 7.3. This disrupted production and transport activities impacting businesses and houses throughout the northern region.


Across the world, major automakers and home appliance producers have announced production halts due to a shortage of semiconductors.  


Renesas Electronics, which holds over 30pc share in the world’s microcontroller chips market expects it could take at least the second quarter 2021 to see productions returning to normal. One of the plants was also hit by a fire accident in Japan and efforts are being made to restore its production to normal soon as possible.  


Japanese government has asked a few Taiwanese chips manufacturers to supply chips to Japan amid a huge shortage domestically. Imports of chips from Taiwan could ease the situation upto some extend, believe officials.  


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