May 16, 2013: The growing tension in Korea, where North Korea keeps threatening war, has a large number of people in the consumer electronics business worried. If there were a war that lasted long enough and did enough damage to disrupt production of the many electronics components South Korea supplies, there would be a lot fewer cell phones, PCs (desktop, laptop, and tablet), and flat screen displays (for PCs or TVs) available worldwide. We’re talking major shortages. South Korean firms are the largest producers of smart phones (Samsung) and flat screen everything (Samsung and several others).

The South Korean military understands the importance of protecting its economic assents in general and the high-value electronic industry in particular. The South Korean war plan, while classified, is known to take account of the need to defend these assets. This is crucial because some of the electronic component manufacturing plants would take several years to rebuild and put thousands of highly skilled people out of work in the process, as well as cause South Korean firms to lose customers and future sales to competitors.

The disruptive impact of such losses is not theoretical, it has already happened. In the last decade floods in Thailand and earthquakes in Japan have disrupted supplies of key electronics. This caused shortages and sharply increasing prices. The floods in Thailand two years ago disrupted the supply, and prices for hard drives worldwide, because Thailand is where many of the largest plants are located. South Korea is even more critical because many electronics items are not just assembled there but key components are designed and manufactured as well. Some of that work requires highly complex and expensive factories to get it all done. If there were extensive damage to these plants there would be shortages of many popular electronics items, prices would double (or worse) for what is available and it would take more than a year for the situation to be rectified.

It’s not just civilian consumers that would feel the pinch but the military as well. Many key military electronic items are built from South Korean components. The exact impact of that is not talked about openly by the military, but apparently the impact would be very serious, especially for the production of expendable items (like missiles).