Cyclone Season Analysis: Pacific & Atlantic Electronics Supply Chain Hotspots

Hurricane and typhoon season is upon us. Around this time of year, we start to hear those singular names that label a new force of potential destruction: "Michael," "Katrina," "Haiyan," the list goes on...

In this cyclone season analysis, we're going to take a closer look at past hurricanes and typhoons using data derived from the Z2Data team, along with the help of some outside sources.

We'll analyze seasons spanning from 2017-2019 and assess which regions are hurricane/typhoon "hotspots" during these summer months. Additionally, supplier sites will be added to hotspot maps to identify at-risk regions in the Pacific and the Atlantic.

After our analysis of past hurricane and typhoon seasons, we will direct our attention toward the years to come.

As of now, 2021 is predicted to be the sixth straight year of an above-average hurricane season. If this trend of above-average seasons is to continue, will above-average not become the "new" average?

And will this trend develop into one where extreme hurricane and typhoon seasons become the new normal?

Stand back from any windows, lock your doors, and find the nearest closet.

We're just getting started.

Analysis of Atlantic Hurricane Seasons (2017-2020)

2017's Atlantic hurricane season was the costliest hurricane season on record. The total damage exceeded $294 billion. There were 10 hurricanes and 6 major hurricanes during the season. Harvey, Irma, and Maria caused the most damage, while Nate is considered the greatest natural disaster in Costa Rican history.

As seen in the figure below, Harvey, Irma, and Maria trekked through the Caribbean before reaching US soil. Harvey made landfall near Rockport, Texas as a Category 4 storm with peak 152 mph winds. The storm later stalled over Houston, Texas—leading to devastating floods with five-day rain totals exceeding 64 inches in some areas.

Harvey's course likely impacted 3 Texas fabs—one in Corpus Christi, one in San Antonio, and another in Austin.

If each of the 3 fabs were completely shut down for the storm's duration, the combined revenue impact could have exceeded $600 million. The fabs specialized in MOSFETs, chip resistors, and more.

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Irma's course took here straight through Miami and up Florida's western coast. This course coincided with 3 fabs that have a combined revenue impact of over $300 million.

2018's hurricane season featured 8 hurricanes and 2 major hurricanes. The 2018 season was also the fourth consecutive year a storm developed before the official start of the season.

While several hurricanes made landfall, only a few left significant damage. Disastrous flooding was produced by Hurricane Florence in the Carolinas, leaving over $24 billion in damages. Hurricane Michael left extensive damage in Florida, Georgia, and Alabama: causing at least 64 deaths and nearly $25 billion in damages.

2018's Florence was similar to Harvey in that it made landfall and stayed. The lingering storm caused great floods and shutdown roadways—leading to supply chain disruptions. Kathy Fulton, an executive director of the American Logistics Aid Network, spoke about the supply chain effects of the floods: "Businesses could not deliver via their normal routes."

Even in the case that manufacturers were able to remain open, no one could get there. Not even employees.

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2019's hurricane season was tied with 1969 as the fifth-most active Atlantic hurricane season on record: 18 named storms and 20 total tropical cyclones. Despite the record, many of the storms were weak and only 6 of the 20 achieved hurricane status.

As an aside, it feels a bit strange speaking about "underachieving" hurricanes as if we're disappointed in them. But, no, we love underachieving hurricanes. Less damage and less destruction, please!

Back to topic: 3 hurricanes intensified into major hurricanes, while 2 of the 3 reached Category 5 strength.

The greatest destruction occurred in the Bahamas, by the hand of Hurricane Dorian. Overall, Dorian caused nearly $5.1 billion in damages and 84 fatalities.

2020's Atlantic hurricane season was the most active season on record and was the fifth costliest of all time. A total of 14 hurricanes developed and a record-tying 7 further developed into major hurricanes. Despite all of the extreme activity, 2020 was the first season since 2015 that no Category 5 hurricane had formed.

What Are the Atlantic Hurricane Hotspots?

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As shown above, the Z2Data team has mapped the Atlantic Hurricane hotspots in the US with regions color-coded from lowest to highest risk. Additionally, electronic supplier and fab sites have been overlaid onto the map to give an idea of how many suppliers are potentially affected by cyclones each year.

The highest concentration of potentially affected suppliers lies in the northeast and New England region. Electronics companies that rely on many suppliers in this region should have a plan in place to potentially use alternative supplier sites in the case that a disruptive hurricane occurs.

Analysis of Pacific Typhoon Seasons (2017-2020)

The Pacific typhoon season of 2017 was considered below-average and was the first since 1977 to not produce a Category 5 storm. The season resulted in 11 typhoons and 2 super typhoons. Another accolade for the 2017 season was it was the first since 1998 to have its first typhoon not appear until July 23.

The 2018 Pacific typhoon season was a different story. At the time, it was the costliest typhoon season on record until (spoiler alert) 2019 came along. The 2018 season produced 13 typhoons and 7 super typhoons.

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The costliest Pacific typhoon season on record, the 2019 season produced 17 typhoons and 5 super typhoons. The first typhoon of the season, Wutip, developed in February and further intensified into a super typhoon: becoming the strongest tropical cyclone ever recorded in February in the Northern Hemisphere.

Typhoon Lekima became the second-costliest typhoon in Chinese history. In Japan, Typhoon Hagibis was one of the costliest tropical cyclones in Japanese history. Lekima, Hagibis, and Faxai (another major typhoon) accounted for $32 billion in damage.

What Are the Pacific Typhoon Hotspots?

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As shown in the figure above, the largest concentration of supplier sites in high-risk areas occurs in Japan and South Korea. Taiwan is also a notable region that is at risk for supply chain disruptions caused by typhoons. Keep an eye on China's east coast as well.

Considering the current electronics chip and semiconductor shortage, supply chains could become further disrupted if Taiwan suppliers are shut down due to typhoons.

2021 Hurricane/Typhoon Season

The 2021 Atlantic hurricane season has officially begun. The National Oceanic and Atmospheric Administration (NOAA) issued its seasonal Atlantic hurricane forecast in late May.

In the forecast, NOAA expects a total of 13-20 named storms with 6-10 hurricanes and 3-5 major hurricanes (which are category 3 or higher). The on-record average for total named storms is 14— with 7 hurricanes and 3 major hurricanes.

The reasoning behind another predicted above-average season stems from the measured temperatures across the Atlantic. The Atlantic's surface temperature has been 1 to 3 degrees Celsius higher than normal May ranges. The significance of this is that ocean surface temperatures often serve as an important predictor in hurricanes. Higher temperatures across the ocean's surface act as a sort of fuel for major hurricanes.

The Pacific Typhoon season, on the other hand, is forecasted by the NOAA to be average to below-average. The forecast predicts 12-18 named storms, 5-10 typhoons, and 2-5 super typhoons. The primary predictors of the forecast were the average to below-average ocean surface temperatures across the Pacific and El Niño staying in a neutral phase, which means less warming is occurring.

Future Hurricanes & Typhoons to Be More Extreme?

Research conducted by the NOAA has raised concern for future hurricane and typhoon seasons. The research presents a strong body of empirically backed evidence suggesting that global warming is very likely (>90%) a result of human-caused greenhouse gas emissions. Global warming has created detectable changes ("detectable... refers to a change that is large enough to be clearly distinguishable from the variability due to natural causes...") in hurricane and typhoon activity.

NOAA has concluded the following in their study:

• Rising sea levels
• Increased tropical cyclone rainfall rates
• Increased tropical cyclone intensities
• Increased global proportion of Category 4 and 5 tropical cyclones

The study's terminology states that each of the 4 bullet points listed above has a greater than 66% chance of occurring.

The report also concludes that it may be premature to conclude with high confidence that human activities are the cause of potentially extreme cyclone seasons. Additionally, the report cites that human activities may already have caused changes in cyclone activity that have yet to be detected by researchers.