Japan disaster could lead to shortage of electronic parts

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According to market analysts at Isuppli, the earthquake and tsunami in Japan could result in significant shortages of certain electronic components, potentially causing pricing for devices to increase dramatically.

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, dynamic random access memory (DRAM), microcontrollers, standard logic, liquid-crystal display (LCD) panels, and LCD parts and materials.

Japan is also the world’s largest supplier of silicon used to make semiconductor chips — at about 60 per cent of the global total. If this supply is disrupted, this will also have an impact on discretes such as MOSFETs, bipolar transistors and small signal transistors.

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. These shortages and their price impact are likely to linger until the third quarter, according to the research company.

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 has already climbed by as much as 10 per cent on the spot market, which buyers use to procure relatively small quantities of parts.

Spot-market DRAM pricing is also surging, rising by as much as seven per cent since last Friday. Contract pricing is holding steady for the time being, but modest increases are likely as contracts are renegotiated.

Most of country’s largest electronic component producers operate their manufacturing facilities far to the south of the epicentre 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.