The earthquake and tsunami in Japan could result in significant shortages of certain electronic components, potentially causing pricing for these devices to increase dramatically, warns market researcher iSuppli. While there are few reports of actual damage at electronic production facilities, impacts on the transportation and power infrastructure will result in disruptions of supply, resulting in the short supply and rising prices. Components impacted will include NAND flash memory, DRAM, microcontrollers, standard logic, LCD panels, and LCD parts and materials. Japan is the world’s largest supplier of silicon used to make semiconductor chips, at about 60 percent of the global total. If this supply is disrupted due to the logistical and infrastructure challenges Japan is facing this will have an impact not only on NAND flash memory, DRAM, microcontrollers, standard logic, LCD panels and LCD parts, it will also affect other families of products such as discretes, i.e. MOSFETs, bipolar transistors and small signal transistors. Infrastructure challenges are expected to slow or suspend shipments from Japan during the next two weeks. However, the global supply chain has about two weeks of excess component inventory in the pipeline for semiconductor parts affected by the quake. Because of this, the shortages are not likely to appear until the end of March or the start of April, iSuppli expects. Still, these shortages and their price impact are likely to linger until the third quarter.
While actual shortages haven’t occurred yet, the disaster is already affecting component pricing, due to the psychological impact of the disaster. Pricing for higher-density NAND flash already has climbed by as much as 10 percent on the spot market. However, the market researcher does not expect price volatility for OEM DRAM customers and it is likely that the average selling price for major OEM customers on the contract market will hold steady for sustained periods of time until the supply chain moves past the infrastructure challenges.
Most of country’s largest electronic component producers operate their manufacturing facilities far to the south of the epicenter of the quake and the areas most impacted by the tsunami. Consequently, damage was negligible. However, companies are facing problems shipping components, receiving raw materials and getting workers to their facilities. Power interruptions also are slowing production—and can be a major impact on the operations of manufacturing facilities—depending on the type of product being manufactured. For example, Toshiba, the world’s second-largest producer of NAND flash, said shipments of NAND from its central Japan plant could drop by up to 20 percent in January and February. However, leading NAND supplier Samsung Electronics of South Korea should be able to partially compensate for the shortfall. Furthermore, Hitachi’s fab is closest among the small/medium display facilities to the earthquake site. Production at this Hitachi fab was halted on 14 March to gauge the impact on the quake. Even if no structural damages are found, production is likely to be impacted by the ensuing interruptions in the power supply. Hitachi supplies displays for the Nintendo DS handheld video game system and for LG phones. If the display production is shut down for a month or more, it could impact delivery of these panels.
