Tags: Chip | Prices | Surge | Japan | Quake-Hit | Shortage | Concerns

Chip Prices Surge on Japan Quake-Hit Shortage Concerns

Monday, 14 Mar 2011 11:30 AM

Prices of semiconductors used in personal computers and mobile phones jumped on supply-shortage concerns after factories were shut down in the wake of Japan’s worst earthquake on record.

The price of the benchmark DDR 3 1-gigabit dynamic random- access memory chip climbed 7 percent to $1.11, the largest gain since Jan. 27, according to Taipei-based DRAMeXchange. Spot prices of the 4-gigabit NAND flash-memory chip rose 17 percent. DRAM chips are used to store data temporarily to help devices run multiple programs, while NAND flash memory saves songs and pictures in smartphones, MP3 players and digital cameras.

“The jump in prices reflect the worries and uncertainties in the market,” analyst Andy Perkins at SG Corporate & Investment Bank said. “It is however too early to say if this is a short-term reaction.”

Toshiba Corporation, the Japanese manufacturer of electronic devices and also the world’s second-largest maker of NAND chips after South Korea’s Samsung Electronics Co., said it halted operations at its plants and offices in areas affected by rolling power outages. Apple Inc., the maker of the iPod music players and iPhone mobile phones, is among companies that Toshiba’s flash-memory chips.

The 8.9-magnitude quake and subsequent tsunami on March 11 may have killed 10,000 in Miyagi prefecture north of Tokyo, national broadcaster NHK said, citing police. Radiation levels around the Tokyo Electric Power Co. station in Fukushima, 135 miles north (217 kilometers) of the capital, rose after cooling systems at a second reactor failed, heightening concerns about a possible meltdown following an explosion over the weekend.

Delays, Higher Costs

Analysts say manufacturers may face higher component costs and delays as a result of the earthquake.

“This could cause a delay at hubs where you create devices and pricing could go up,” analyst Lee Simpson at Jefferies said.

Japan is “critical” to the worldwide electronics supply chain as the country accounts for 40 percent of global NAND flash chip production and 15 percent of DRAM chip manufacturing, said Howard Wheeldon, a senior strategist at BGC Partners in London, citing research from Objective Analysis.

Toshiba shares lost 16.3 percent to 411 yen, the most since January 2009, in Tokyo trading. In South Korea, Samsung Electronics, also a supplier of NAND flash chips, rose 4.4 percent and Hynix Semiconductor Inc jumped 8.7 percent. The gains suggest that “these companies will benefit from and compensate for lost production in Japan,” analyst Victor Bareno at SNS Securities wrote in a note.

Production Halt

Shin-Etsu Chemical Co., which makes silicon wafers needed to produce semiconductors, has said it stopped operations at its manufacturing complex in Annaka, Gunma prefecture; the Kashima Plant in Kamisu, Ibaraki prefecture; and the Shirakawa plant in Nishigo Village, Fukushima prefecture. The company aims to resume operations after safety inspections and measures have been completed.

Sumco Corp., another Japanese maker of silicon wafers, halted a factory in Yamagata prefecture because of damages stemming from last week’s earthquake, the company said in a statement.

Disruptions at Shin-Etsu and Sumco Corp., which account for about 60 percent of the world’s electronic wafers, will undermine global supply, according to Klaus Ringel, an analyst at Credit Agricole Cheuvreux.

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Prices of semiconductors used in personal computers and mobile phones jumped on supply-shortage concerns after factories were shut down in the wake of Japan s worst earthquake on record. The price of the benchmark DDR 3 1-gigabit dynamic random- access memory chip climbed...
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2011-30-14
Monday, 14 Mar 2011 11:30 AM
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