GLOBAL CHALLENGES

Demand Grows for Digital Compasses, Supplies Stable

R. Colin Johnson | Date: 03-29-11 | Comments

Japan's earthquake has slowed or stopped electronics manufacturing in many facilities�especially automotive electronics�but digital compass makers claim to be keeping up with growing demand for location-based services in vehicles, smartphones, personal navigators and touch-screen tablets.

Digital compass makers are hustling to avert a global shortage that could stunt sales of popular navigational electronics in vehicles, touch-screen tablets and nearly all smartphones, but automotive electronics manufactured near the stricken nuclear reactor in Japan are on indefinite hold.

Nearly 97 percent of the digital compasses used in vehicle- and personal-navigation systems, smartphones, and touch-screen tablets are manufactured in Japan�specifically at AKM Semiconductor, Yamaha, Aichi Steel and Alps. According to IHS iSuppli, more than 260 million digital compasses shipped in 2010, up over 350 percent from 58 million in 2009, and that number is predicted to grow to over 1.2 billion units per year by 2015.

More than 260 million digital compasses shipped in 2010, up over 350 percent from 58 million in 2009, and over 1.2 billion units per year are predicted to ship by 2015, according to IHS iSuppli.

Digital compasses debuted in Apple's iPhone 3 and later in the iPad 2, and as a result, can now be found in every new Android and Windows smartphone and touch-screen tablet. Digital compasses are also being added to gaming controllers, such as Sony's Move controller for its PlayStation 3 (PS3) and the upcoming Sony PlayStation Portable 2 (PSP2).

The iPad 2 is especially sensitive to supply chain shortages, since Apple is already unable to meet demand and the AKM digital compass it uses has no announced second sources. However, AKM's fabrication assembly line (or "fab") is located on Kyushu Island at the southern tip of Japan's archipelago, far from both the earthquake epicenter and the tsunami landfall on the main island in the northeast. Despite raw material shortages across Japan, AKM claims to have multiple fabs and an independent foundry that it can bring online to meet demand.

The second largest digital compass maker, Yamaha, also claims its fab is on Kyushu Island, where its Kagoshima factory is undamaged and reportedly not experiencing the rolling power blackouts on the main island. Yamaha reports addressing potential logistical problems by changing ports to those unaffected by the quake, according to IHS iSuppli, which claims that Aichi Steel, whose fab is in Aichi Ken near Nagoya, and Alps, whose fab is in Nagaoka near the quake zone, both report no damage and normal operations.

AKM's electronic compass, using Hall sensor technology on a CMOS chip, was discovered inside Apple's iPhone 3 and 4 by Chipworks.

Unfortunately, slowed manufacturing of infotainment LCDs and other optical components in the quake zone could drag down the automotive supply chain worldwide. Also according to IHS iSuppli, 35 percent of the $31.5 billion worldwide automotive infotainment electronics market�$11 billion�comes from Japan. And 32 percent of the $22.9 billion worldwide market for automotive semiconductors�$7.3 billion�is made in Japan.

Shuttered fabs may take six weeks to three months or more to be back at full manufacturing capacity.