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Nokia has just announced concerns in supply chain. What's the impact to Apple ...
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Quake to cause prices hikes, shortages
Mark Lapedus
3/15/2011 4:40 PM EDT
SAN JOSE, Calif. - The Japan earthquake could result in shortages of certain electronic components and materials, potentially causing pricing for these devices to increase, according to IHS iSuppli.
''Components impacted will include NAND flash memory, dynamic random access memory (DRAM), microcontrollers, standard logic, liquid-crystal display (LCD) panels, and LCD parts and materials,'' according to IHS iSuppli.
Pricing for higher-density NAND flash already has climbed by as much as 10 percent on the spot market,'' according to the research firm. ''Spot-market DRAM pricing also is surging, rising by as much as 7 percent since Friday. Contract pricing is holding steady for the time being, but modest increases are likely as contracts are renegotiated.''
There are other issues in the supply chain, namely the impact on wirless. ''Our early expectation is that the earthquake is likely to affect the handset community the most, given a potential material supply chain disruption,'' according to Barclays Capital, in a report.
''This region of Japan is a leading supplier of capacitors, filters and inductors used in handsets. The industry had just begun recovering from broad component shortages and thus inventories remain thin, according to the report. An extended shortage would likely pressure our estimate of 9 percent unit growth this year, which includes 48 percent growth in smartphones. We consider Nokia the most exposed to the Japanese supplier community.''
Indeed, Japan boasts some major passives makers. ''Nippon Chemi-con, which supplies over 20 percent of the world market for aluminum electrolytic capacitors, produces the key component of capacitor foil at its Takahagi plant, which was exposed to a grade-6 plus earthquake on the Japanese scale, according to the report.
''The company’s other major facilities in Yamagata and Miyagi include aluminumre electrodes and dielectric molecules (30 percent market share). Other facilities that could significantly impact supply chains include Murata's Tome plant (EMI filters and inductors), connector output at Tohoku Hirose (part of the Hirose Electric group, which produces at its Miyako plant and a number of outsourcing contractors), and several plants operated by Alps Electric,'' according to the firm.
Craig Berger, an analyst with FBR, sees other issues. ''Our contacts in Asia suggest one of the bigger problems may actually be the growing shortage of BT (bismaleimide triazine resin), an epoxy resin that is used in many chip package substrates including PBGA (plastic ball grid array) packages produced by back-end assembly/test firms like ASE, Siliconware Precision (SPIL), and Amkor,'' he said. ''BT is almost entirely produced by Mitsubishi Gas Chemical.''
''Components impacted will include NAND flash memory, dynamic random access memory (DRAM), microcontrollers, standard logic, liquid-crystal display (LCD) panels, and LCD parts and materials,'' according to IHS iSuppli.
Pricing for higher-density NAND flash already has climbed by as much as 10 percent on the spot market,'' according to the research firm. ''Spot-market DRAM pricing also is surging, rising by as much as 7 percent since Friday. Contract pricing is holding steady for the time being, but modest increases are likely as contracts are renegotiated.''
There are other issues in the supply chain, namely the impact on wirless. ''Our early expectation is that the earthquake is likely to affect the handset community the most, given a potential material supply chain disruption,'' according to Barclays Capital, in a report.
''This region of Japan is a leading supplier of capacitors, filters and inductors used in handsets. The industry had just begun recovering from broad component shortages and thus inventories remain thin, according to the report. An extended shortage would likely pressure our estimate of 9 percent unit growth this year, which includes 48 percent growth in smartphones. We consider Nokia the most exposed to the Japanese supplier community.''
Indeed, Japan boasts some major passives makers. ''Nippon Chemi-con, which supplies over 20 percent of the world market for aluminum electrolytic capacitors, produces the key component of capacitor foil at its Takahagi plant, which was exposed to a grade-6 plus earthquake on the Japanese scale, according to the report.
''The company’s other major facilities in Yamagata and Miyagi include aluminumre electrodes and dielectric molecules (30 percent market share). Other facilities that could significantly impact supply chains include Murata's Tome plant (EMI filters and inductors), connector output at Tohoku Hirose (part of the Hirose Electric group, which produces at its Miyako plant and a number of outsourcing contractors), and several plants operated by Alps Electric,'' according to the firm.
Craig Berger, an analyst with FBR, sees other issues. ''Our contacts in Asia suggest one of the bigger problems may actually be the growing shortage of BT (bismaleimide triazine resin), an epoxy resin that is used in many chip package substrates including PBGA (plastic ball grid array) packages produced by back-end assembly/test firms like ASE, Siliconware Precision (SPIL), and Amkor,'' he said. ''BT is almost entirely produced by Mitsubishi Gas Chemical.''
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eewiz
3/15/2011 11:45 PM EDT
Except Apple,which made upfront fab investments, every other phone/tablet vendor will suffer from high DRAM/LCD/Display pricing due to the situation in Japan!
BTW didnt know the Japanese makes so much of the passives. Aint it a very low margin business? They should manufacture it in china.
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davejor
3/16/2011 1:09 PM EDT
Passives are manufactured in China, but any manufacturer interested in producing a quality product buys their passives from Japan. That includes most Taiwan manufacturers.
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docdivakar
3/16/2011 9:15 PM EDT
@Mark LaPedus: thanks for the update. It seems like every few years the industry learns the hard way the impact of allowing a majority of components sourced from one or two locations. Years ago there was the DRAM crisis with fires in S. Korea; and now we have the impact of earthquake and Tsunami damages on the industry.
The NAND flash prices are already increasing, albeit modestly, due to the crisis in Japan:
http://au.news.yahoo.com/tech-news/a/-/technology/9018379/chip-prices-jump-as-japan-quake-threatens-supply/
It is still unfolding so it is hard to judge at this point what the impact is going to be on the supply chain and on the component- & system-prices; minimal overall impact or significant increase in prices and stoppage/delays.
Dr. MP Divakar
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agk
3/17/2011 1:46 AM EDT
Natures destruction at one place gets negatively effected rest of the world most of the time. Similarly the natures boon at one place rewards the world also.Some how every thing is linked together.
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chanj
3/21/2011 2:36 PM EDT
Nokia has just announced concerns in supply chain. What's the impact to Apple and Motorola? Will Samsung be affected?
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