Japanese quake will spark component price rise

Darren Allan

March 15, 2011

The ongoing disaster in Japan, which began with the quake and tsunami, and is continuing with the radiation leakage at the Fukushima nuclear plant, will undoubtedly have ramifications in the electronics industry.

Specifically, there are likely to be shortages of electronic components due to the disruption to manufacturers. While the big plants haven’t been directly affected in general, the quake’s impact on the power grid and transportation is going to cause a good deal of chaos.

And according to analyst outfit iSuppli, component shortages have the potential to be significant in nature, with large price hikes possible.

Affected areas will include NAND flash memory, DRAM, micro-controllers, and LCD parts and panels. Other electronic parts could well be affected in the bigger picture, as Japan is the world’s foremost supplier of silicon used to make semiconductor chips (supplying 60% of the global market).

What does this mean? The price of any consumer tech product could be on the rise, although it will take some time for any increases to come through. iSuppli reckons that currently, the supply chain has around two weeks of excess components, so shortages probably won’t feed through until next month.

But when they do make themselves felt, the effects will probably linger on until the second half of 2011.

Despite the fact that supplies are fine at the moment, there have already been pre-emptive price spikes, with the spot market price for higher-density NAND flash going up 10%.

Of the Japanese electronics manufacturers who had facilities nearer to the earthquake zone, iSuppli singles out Hitachi and Panasonic for possible prolonged disruption. The latter could impact Panasonic LCD TV set production, and the former makes displays for the Nintendo DS and LG smartphones.


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