Quake to cause prices hikes, shortages
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.''