Fire Destroys AKM Factory, Bad News for Audio Supply Chain

Wayde Robson

Wayde Robson

Audioholics Anchorman
Some of our favorite audio manufacturers may be panic buying AKM semiconductors after a fire destroyed a key factory in Nobeoka City, Japan. Fortunately, nobody was hurt, but the fire that raged for three straight days has taken manufacture of AKM DACs and other important components completely offline for at least six months.

More bad news for audio arrived just months after another devastating fire took out the Apollo Masters lacquer plant in California, leaving fans of analog vinyl without the source for some 75% of the world's lacquer masters, creating delays in new vinyl releases and scheduled reprints of older albums. This time, fire attacked the digital realm via the source for nearly half of the DACs, ADPs and other audio processing chips used in higher-end consumer hi-fi and pro-audio components. To say 2020 has been a bad year is an understatement, but it's been especially tough on audio. You'd think we were living through some kind-of cosmic imbalance, amid a plague that has changed everything, fire seems determined to destroy music. I know, I know, things can always get worse. But I say we ought to be watching out for any meteors moving into our solar system, at least for the next couple of months.

Here's the full story, we included responses & fallout we're seeing from the accident in consumer and pro-audio industries:
Fire Destroys AKM Audio Chip Factory: Can 2020 Get Any Worse?
AKM-Factory-Fire.jpg
 
gene

gene

Audioholics Master Chief
Administrator
I can't believe crickets on this thread. This is pretty big news that will affect pro and consumer audio in a very big way over the next year or so...
 
BoredSysAdmin

BoredSysAdmin

Audioholic Overlord
I expect it will be probably much worse than the 2011 Thailand floods which crippled hard drive manufacturing for several years. At least we still have TI (burr-brown), AD, and Cirrus
 
E

ExoPolitics

Audiophyte
There goes my hope of a AKM DAC integrated with a Purifi Eigentakt based amp for a while.
 
ryanosaur

ryanosaur

Audioholic Warlord
I can't believe crickets on this thread. This is pretty big news that will affect pro and consumer audio in a very big way over the next year or so...
Gene... we've been kicked repeatedly while down for the last 8 mos or so... every time things might look up, we raise our head only to get kicked again!
Hell, I'm still curious to know if I'll wake up an American in 67(?) days... and that after worrying if all of the West Coast was going to burn to ash over the past 2 months.

This is the point in the proverbial picnic when we open the basket to get dessert out and find it covered with ants! I'm smart enough to NOT ask the ridiculous question of "what more!??!?!?," realizing that a Tornad-icane of high-walking Floridian Golf-Gators will be the answer.

o_O :p (Too soon? ;) )

Seriously though... It's a big deal. I get it. But what can we do?

They will hopefully recover.
My irreverent cynicism says: the cost of the parts will likely be passed on to the next manufacturers in line and so forth down the line to us, the consumer. And that's assuming we are still alive to buy our next overpriced and under-discounted upgrades on Black Friday 2022!
 
rebulx

rebulx

Junior Audioholic
Does anyone know which manufactures will be affected by this? Or what percentage of the audio market is using AKM products?
 
E

Erod

Audioholic
Part of the slow response on this thread regarding this is that it happened a couple of weeks ago.

I wonder how badly this will impact the Anthem rollout. Perhaps they have a dozens boxes of AKM DACs, but maybe not. I suspect they may be limited in producing the AVM 90 in large numbers right now.

I thought there was supposed to be a youtube video about this last night from Audioholics?
 
Big-Q

Big-Q

Audioholic Intern
It is only a concern if you are in the market for new gear. I am not and will not be for a couple of years. The fire at the record/vinyl production plant was more of a concern for me and my LP buying.
 
lovinthehd

lovinthehd

Audioholic Jedi
It is only a concern if you are in the market for new gear. I am not and will not be for a couple of years. The fire at the record/vinyl production plant was more of a concern for me and my LP buying.
Could matter to the guys producing the lps even if you don't use their dacs in final playback.....
 
Matthew J Poes

Matthew J Poes

Senior Audioholic
Staff member
Part of the slow response on this thread regarding this is that it happened a couple of weeks ago.

I wonder how badly this will impact the Anthem rollout. Perhaps they have a dozens boxes of AKM DACs, but maybe not. I suspect they may be limited in producing the AVM 90 in large numbers right now.

I thought there was supposed to be a youtube video about this last night from Audioholics?
we posted this late because the initial word from AKM wasn’t all that newsworthy. When I first got word that this happened, we were told the fire wasn’t all that bad. They told manufacturers that they would have chips Available within a few months. That production would be shifted to other facilities. Sucks! But is it news worthy?

Then I was contacted by a manufacturer who told me that AKM just fessed up to how bad the damage really was. His words to me was that AKM lied initially. Bold words to use. He told me that they first corrected the event as suggesting 6 months to get back up and running. Eventually it was clarified as 12 months to begin supplying DACS, ADCS, and other related chipsets. I asked just how bad this would be. He told me that they had enough parts for a quarter and that’s it. All née product development would have to be canceled or shelved. I asked why they would cancel? Because it wouldn’t make sense to design a product based on today’s chips if that may not be what is available in a year.

so I dug a bit deeper, asked more contacts. What I found was manufacturers all telling me they had supply for about 1-2 quarters on existing products. All indicated that new products would have to be put on hold or canceled. Many expected to redesign new products around ESS Sabre DACs. Not drop in replacements. Three different companies told me that AKM told them 12 months to get up and running but 18 months to hit sufficient quantity. No word on if the DACS today are what they will make. They may choose to use these 18 months to develop a new line. It would make sense. Especially since the entire manufacturing line And specialized equipment was destroyed.

I asked an engineer friend why AKM couldn’t produce these audio related chips Elsewhere. He told me they use very special custom made precision laser trimmers. Required to achieve today’s low noise and distortion and not needed for many other chips. The only place AKM has them is this factory and so no other factory can make the chips. The laser trimmers are custom made so they can’t be quickly replaced. Worse yet, there Are still backlog and shortages of parts needed to make the laser trimmers, so the exact delay is unknown.

small manufacturers willing to be more open and honest are now reporting on their websites that they don’t expect to begin manufacturing AKM based products for 18 months. That’s bad. For most companies that Is most of an entire lifecycle.

so while some have suggested this is no big deal and old news, it’s important to understand that the news 3-4 weeks ago was wrong. I can’t say it was a lie, maybe AKM truly Didn’t know how bad it would be. Maybe it was a lie? Maybe they didn’t want to spook the industry too much. In any case, the reality Changed 2 weeks ago when AKM finally came clean and told manufacturers to:
  1. Expect no news chips for 12-18 months
  2. Begin designing new products around competitors chips
  3. Expect uncertainty on what chips will be available in 12-18 montbs
That is a pretty substantial shift and makes for a pretty serious problem.

we probably should have made clear that the news shifted, but we were rushing to get this out. What we were being told was pretty outlandish, that AKM had lied, and so there was a desire to simply tell the facts we know to be true.

I suspect a lot of folks don’t really grasp just how big this is. AKM is by far the largest manufacturer of and most widely used audio semiconductor company. In the pro audio world, their ADC’s are the industry standard used by nearly everyone. The TI Burrbrown chips are old and not widely used on current designs. ESS stopped making their ADC. AKM is basically it.

their DAC chips are used by most companies today as well. ESS is used by some, but on a limited number of products. The AKM is far more widely used by Denon, Marantz, Onkyo, Pioneer, and others. As I understand it, an ESS chip won’t drop in because the designs are too different. It means the products using AKM will need to be substantially redesigned to use ESS. On top of that, some don’t like using ESS and feel the sound is worse.

then you have their volume chips, DSP chips, etc. Analog Devices is more widely used but AKM released new chipsets that were being built into new platforms and now won’t make it to market. The AD chips are old and problematic, as are the TI chips. Im sure the AD will remain ubiquitous because of this. I really had hoped that AKM might have forced the competition to upgrade their chips.
 
G

Gmoney

Audioholic Ninja
So if I'm reading this right, this will cause a shortage of AVR and other audio gear?
 
Matthew J Poes

Matthew J Poes

Senior Audioholic
Staff member
So if I'm reading this right, this will cause a shortage of AVR and other audio gear?
Yes.

the major manufacturers will be ok for at least one more quarter. It all depends on how much they had on hand and if they rely on AKM parts. The top of the line velvet series will be most impacted since they were already more limited production. A company like Yamaha or Sound United has big buying power (and I don’t believe Yamaha uses any AKM parts) and might be able to secure more parts at cheap enough prices to continue a while longer. Small companies are already pulling products. A lot is going out of stock as we speak.

so yes, electronics using AKM parts will become a bit harder to get. For those of you who like ESS DACs, I would expect a lot of new products to rely on those. We may also see more products using TI BB, AD, and CS chips, which hasn’t been as popular lately. It’s not such a bad thing, CS and AD have some new lines that are really nice. Even TI has introduced some new chips that are really good. They don’t have as wide a range, but enough to be interesting. The biggest holdup was that they weren’t using precision trimmers as precise as AKM in as wide a range of products. I think they are starting to do so. I just don’t know how price competitive those are. The newest TI BB chips are very expensive, only something I would expect in audiophile products. Think $5 a chip vs $2 for a similar AKM.
 

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