Kumamoto Earthquake Damages Businesses

The great earthquake in Kumamoto on July 28th paralyzed manufacturing around Kumamoto area. Kumamoto is known as concentration of semiconductor industry. A lot of factories for producing semiconductor and related goods suffered from the earthquake with suspension of their operation. It is not clear how much the earthquake affected businesses in Kumamoto and Kyushu area. 

This earthquake in Kumamoto imposed great damage on various industries. It has blown away Aeon Mall Kumamoto, which is one of the greatest shopping malls in Kyushu region. Leak of gas after the earthquake is supposed to have caused a major explosion in the building. Three chimneys in Yatsushiro Factory of Japan Paper fell down with the quake. The factory was producing papers for books and newspapers. The chimneys had been the symbol of landscape of Yatsushiro city.

 

Having many facilities for semiconductor and related industries, Kyushu is dubbed as “silicon island.” Kumamoto is the center of the silicon industries in Kyushu. Taiwan Semiconductor Manufacturing Company (TSMC) built a large factory in Kumamoto in 2024. The factory stopped its operation right after the earthquake and it has no perspective for resumption.

 

A factory of Renesas Electronics, producing semiconductor for cars, suffered from falling of panels on the ceiling or leakage of water. Factory of Sony Semiconductor Manufacturing for image censor also stopped its operation. Tokyo Electron, Mitsubishi Electric and Toppan have production bases in Kumamoto prefecture, which are affected by the major earthquake.

 

Three factories of Toyota Motors in Fukuoka prefecture stopped operation after the earthquake, as well as a factory for motor cycles of Honda in Kumamoto or two factories of Nissan in Fukuoka. Suntory has been shipping beers and beverages from Kumamoto factory and Coca Cola also has been producing beverages in Kumamoto. Those industries had to suspend their operation after the earthquake.

 

The Kumamoto earthquake made three highways unavailable. Bridge girders dropped from piers in some places. The unavailable highways stretched as long as 110 kilometers. That significantly damaged transport businesses. Yamato Transport and Sagawa Express stopped acceptance of new parcel in Kumamoto area, because they are unable to send parcels due to broken highways. Japan Postal Service also stopped its service over the counter.

 

With current surge of semiconductor production recent years, gross domestic production in Kumamoto prefecture has been increasing. The manufacturers have been showing active employment in local community. Kumamoto earthquake damaged that positive trend in local economy. The government of Japan is considering emergency financing to maintain local small and mid-size businesses.

 

Slowdown of businesses in Kumamoto may have great impact on broader economy. Semiconductors production in Kumamoto had 54.7 percent of share in Japan in 2023. While some factories restarted their operation, the suspension of production may have major impact on Japan’s economy, if it is protracted. As Japan explores security of supply chain, Prime Minister Sanae Takaichi is facing necessity of delivering appropriate measures to maintain productivity of businesses in Japan.

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