Beyond the devastating loss of life and property, the earthquake and tsunami that hit Japan last week are likely to shorten the supply and increase prices of key electronic components, according to a report released yesterday by IHS iSuppli.
Most of the factories for the major electronics makers managed to escape severe damage as they were located far enough away from the epicenter of the quake and the areas affected by the tsunami.
However, the disaster has severely affected the country's transportation and power grids, leading to problems shipping and receiving parts, getting people to work, and maintaining production.
With Japan producing more than 40 percent of the world's NAND flash supply and around 15 percent of the world's DRAM, according to one report, those and other components are likely to be hit the hardest with shortages and rising prices.
As one example, Toshiba, the world's second-biggest maker of NAND flash memory, said that shipments of NAND from its Japanese plant could drop by as much as 20 percent for a couple of months. However, Korea-based Samsung, the No. 1 NAND maker, may be able to compensate to some degree, IHS said.
Companies that make LCD (liquid crystal display) components are also eyeing potential slowdowns.
Production at a Hitachi LCD fabrication plant that was among those nearer to the earthquake site was shut down yesterday as the company surveyed the effects from the quake. Even if no major damage is found, interruptions in power could stall production and shipping of the displays that Hitachi makes for the Nintendo DS game console and for LG mobile phones.
Panasonic is also likely to be affected by power issues as the company runs an LCD plant that makes panels for its own TVs and those of other companies.
Most suppliers have about two weeks worth of excess inventory of semiconductor parts and other components, according to IHS iSuppli, so the shortages probably won't be felt until the end of March or the beginning of April. However, the psychological impact of the earthquake is already affecting some prices, causing a 10 percent increase in higher-density NAND flash and a 7 percent rise in DRAM pricing in spot market trading.
The shortages and their influence on prices could last until the third quarter, forecasts IHS.