Manufacturers across Asia are scrambling to ramp up production of key components for electronics, as shortages have frustrated consumers and disrupted business for companies from Apple Inc. to Nissan Motor Co.
Unexpectedly strong consumerappetite for gadgets like Apple's iPad and new smartphones from HTC Corp. has stretched the capabilities of some companies that make the memory chips, touch displays and other parts found in those devices. Auto sales, too, have snapped back, straining supplies of custom chips used in cars.
Companies like Apple and Nissan are seeing the drawbacks of lean manufacturing methods, which call for carrying little inventory but make supply snags tougher to offset.
They are also victims of an overstretched global supply chain trying to meet recovering demand after the recession forced suppliers to slash production capacity and postpone plans to upgrade their facilities.
'It's extremely difficult for the suppliers to ramp up capacity suddenly, especially after a period when many firms slashed capital spending,' said Masatsune Yamaji, a seniorresearch analyst at Gartner Research.
Toshiba Corp. said Wednesday it has started construction for a new chip facility in Yokkaichi, Japan, together with SanDisk Corp., to produce flash memory chips used to store data in gadgets like iPhones, but that plant won't be completed until the spring of next year.
Samsung Electronics and Toshiba, two of the world's biggest makers of such memory chips, say the market is in shortage, and both have plans to increase spending to boost output.
Companies have maneuvered to try to make sure they get access to key components. Last July, Apple made a $500 million prepayment to Toshiba to secure supplies of flash memory chips.
Still, Apple has been unable to meet demand for its iPad, which went on sale in April, or its new iPhone 4. Although the company has long-term contracts with major suppliers, analysts point to shortages of the gadgets' specialized touch displays.
An Apple spokeswoman declined to identify the company's suppliers or comment on the component issue. The company said last month that white versions of its new iPhone 4 wouldn't be available until the second half of July because they were 'more challenging to manufacture than expected.'
Wintek Corp., a Taiwan-based maker of touchscreens, plans to start mass production of a new production line in Dongguan, in southern China, in the fourth quarter, said spokesman Jay Huang. 'The new line is expected to alleviate the shortage to some extent,' he said.
Production stoppages can plague companies that strive to exert tight control over interwoven and highly sophisticated supply chains, considered an essential way for manufacturers to shave costs, reduce inventory risk and fatten profit margins.
The pitfalls of lean manufacturing methods, a hallmark of cash-rich and efficient companies, arise when parts either prove faulty or in short supply. Production delays or stoppages are common in the electronics and automotive industry.
-By Daisuke Wakabayashi and Lorraine Luk