Report: Digital Compass Supply Stable After Japan Earthquake

Market research firm IHS iSuppli on Wednesday said the earthquake in Japan that has shut down many aspects of the country’s economy and created uncertainty around the supply of PC components will not prevent digital compass makers from meeting global demand.

According to the report, digital component makers in Japan have continued to operate their facilities despite the fallout from the earthquake, which includes the disruption of the transportation system and infrastructure.

According to IHS iSuppli, worldwide demand for digital compasses has gone from 58 million in 2009 to 263 million units in 2010, up 354 percent.

Digital compasses are reportedly featured in Apple’s third and fourth generation iPhone products, as well as devices running Google’s Android OS and Microsoft’s Windows 7 platform. ’Digital compass usage is rising rapidly, with the device becoming a standard feature in tablets and in cell phones equipped with the global positioning system (GPS) feature,’ said Jeremie Bouchaud, director and principal analyst at IHS iSuppli, said in a statement.

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Demand for digital compasses, 97 percent of which were manufactured in Japan last year according to IHS iSuppli, has steadily increased with that of mobile devices that feature the compasses including Apple’s iPhone and iPad. According to the report, the top four suppliers of digital compasses to the worldwide market -- AKM, Yamaha, Aichi Steel, and Alps -- are all based in Japan.

AKM reportedly said its main digital compass facility for components that are featured in Apple’s new iPad 2 tablet has not been damaged, as it is located on Kyushu island, which is relatively far from where the earthquake hit. Furthermore, AKM said it has multiple facilities at its disposal, giving it the flexibility to overcome unforeseen circumstances such as natural disasters, according to the report.

While there are other digital compass manufacturers in Japan, according to IHS iSuppli, the nature of electromagnetic interfaces prohibits manufacturers like Apple from simply replacing its AKM compasses with components from another supplier.

Yamaha, the second largest supplier of digital compasses, reportedly said its manufacturing plant, also located on Kyushu Island, has not been damaged by the earthquake, and that it has the ability to change locations if faced with logistical issues. The number three supplier Aichi Steel reportedly said its digital compass has suffered no damages and is operating on schedule; while the fourth-largest supplier, Alps, whose compass plant is closer to the earthquake's epicenter than those of its competitors, reportedly said its facility is operating as it would normally.

Next: Initial Reports Of The Impact

Investors including Morgan Stanley have said Japanese semiconductor and component manufacturers have been affected by the earthquake in Japan, but the inventories of many of those suppliers is sufficient in the short-term.

Except for a few components such as NAND memory, which is used in the production of SSDs and hard drives, most Japanese component production is done in the southern part of the country, well outside the earthquake and tsunami impact zone.

However, iSuppli previously said the earthquake in Japan has caused delays and work stoppages in the PC industry, and manufacturers including Lenovo, Toshiba, and Apple may face supply shortages and price increases, as well as panic buying.