Scarcity of semiconductors expected

16 March 2011

16 March 2011 | Angeline Albert

Japan’s earthquake and tsunami could result in significant shortages of electronic components and prompt prices to dramatically rise, market research analyst iSuppli has warned. 

The disaster’s impact on the country’s transport and power infrastructure could result in supply disruptions and higher prices for components including flash memory chips which are used in USB drives and MP3 players, dynamic random-access memory or DRAM, small computers called microcontrollers, and liquid-crystal display (LCD) parts and materials including panels used for TVs and computer screens.

Japan is the world’s largest supplier of silicon used to make semiconductor chips - 60 per cent of the global total. A spokesman for iSuppli said: “If supply is disrupted due to the logistical and infrastructure challenges Japan is facing it 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 small signal transistors.” 

iSuppli said infrastructure challenges may result in suspended shipments from the country over the next two weeks. However, the firm said the global supply chain has a fortnight of excess component inventory for semiconductor parts. As a result, iSuppli said the shortages would not appear until the start of April but any scarcity and their price impact would linger until the third quarter of the year.

The research firm said while shortages are yet to occur “the disaster is already affecting component pricing, due to the psychological impact”.

Pricing for higher-density NAND flash has already climbed by as much as 10 per cent on the spot market, which buyers use to purchase relatively small quantities of parts. Spot market DRAM pricing has also risen by 7 per cent since 11 March.

Most of country’s largest electronic component producers operate factories far south of the quake’s epicentre. However iSuppli said component manufacturers are experiencing problems shipping parts, receiving raw materials and getting workers to their facilities.

Toshiba,the world’s second-largest producer of NAND flash, said shipments of NAND from its central Japan plant could drop by as much as 20 per cent. On 14 March, Toshiba said it would “cooperate with Tokyo Electric Power Company’s request to cut electricity consumption by operating only those of its businesses related to provision of essential services”.

Hitachi has a plant close to the earthquake’s epicentre and production at its site was halted on 14 March. The company supplies displays for the Nintendo DS handheld video game system and for LG mobile phones. The company said in a statement: “Hitachi’s buildings and production facilities have suffered damages, mainly at production bases in Ibaraki prefecture.”

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