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15 Mar 2011 06:54
Prices for key technology components spiked and global supply disruptions were expected to last for months as the toll on Japan’s infrastructure mounted after Friday’s devastating earthquake and tsunami.
Research firm IHS iSuppli said on Tuesday the quake and its aftermath could result in significant shortages of some electronic parts and lead to big price hikes.
Spot prices of NAND flash chips had already jumped 20% on Monday, while DRAM memory chip prices rose 7%, iSuppli said.
Japan accounts for one-fifth of the world’s semi-conductor production, including about 40% of flash memory chips used in everything from smartphones, tablets to computers.
“While there are few reports of actual damage at electronic production facilities, effects on the transportation and power infrastructure will result in disruptions of supply, resulting in the short supply and rising prices,” iSuppli said.
“Components effected will include NAND flash memory, dynamic random access memory (DRAM), microcontrollers, standard logic, liquid-crystal display (LCD) panels, and LCD parts and materials.”
Even if shipments of semiconductor parts affected by the quake were disrupted for only two weeks, shortages and their price impact were likely to linger until the third quarter, iSuppli said.
Flash memory demand booming
Demand for NAND flash memory chips has been surging, led by mobile devices and tablets such as Apple’s iPad 2, which is estimated to have sold almost 1 million units during its weekend debut.
Toshiba, which supplies about one-third of the world’s NAND flash memory chips, said it was still inspecting its System LSI factory in Iwate, the only one halted by the quake and tsunami and could not say when it might re-open.
Taiwan’s Wintek, which makes the touch module for the iPad 2, said it had more than two weeks of inventory left and the short-term effect was limited. However, a source at the company said it was using Japanese components and was looking for secondary suppliers.
Hynix Semiconductor, the world’s number two memory chip maker, said it had around two months of wafer inventory but a prolonged disruption in supplies of wafers by major producers such as Shin Etsu may interrupt its production schedule.
Analysts estimate Shin-Etsu is the biggest supplier for Hynix, offering more than 40% of the South Korean firm’s wafer requirement.
“Since we have enough inventory, there’ll be no short-term effect but as the situation gets worse and prolonged, it could have a wide-ranging effect to the overall industry because Japan is a major wafer supplier.
We are diversifying supply sources to non-Japanese firms including Korean firms,” said a Hynix spokesman.
Unlisted LG Siltron is a major silicon wafer supplier based in South Korea.
Chinese chip maker SMIC said it saw minimal effect from the disaster in Japan but was monitoring the supply situation.
Steel to suffer as auto production shuts
Initial concerns that up to 20% of Japanese steelmaking capacity had been affected appeared overblown and steelmakers were instead likely to face major hits to demand as automakers shuttered production for days.
Toyota, Honda and Nissan have closed dozens of plants in Japan.
Toyota plants in Thailand had cut overtime production as it checked on the supply of parts, a spokesperson at the world’s top auto maker said.
Korean shipbuilder Hyundai Heavy Industries said the steel supply situation was better than the market initially feared.
“We expect the steel plate supply to get back to normal within one month.
“We already made an arrangement with local steelmakers for additional orders for emergencies. And we do have steel plate backlogs for two to four weeks.”—Reuters
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