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Flash, DRAM prices spike on worries over supplies from Japan

Dan Nystedt | March 15, 2011
Prices of widely used chips, including NAND flash memory and DRAM, have both risen sharply since the 9.0-magnitude earthquake struck and hurled tsunami waves at the northeastern part of Japan.

Sumco Corporation and Shin-Etsu Chemical, which supply most of the world's silicon wafers, both ceased production at factories near where tsunamis swept entire towns into the sea and damaged the cooling systems of one of Japan's nuclear power plants.

 

Sumco said its factory in Yonezawa was shut after the earthquake. No employees were hurt, and after it does a safety check it hopes to get the factory running again.

Shin-Etsu said three of its factories, one each in Annaka, Kamisu, and Nishigo Village, all stopped after the earthquake.

Production equipment at two of the factories, in Kamisu and Nishigo Village, was damaged, but "at present it is still unclear how long it will take to restore such damaged equipment and facilities at both plants," the company said in a statement Tuesday.

Sumco holds a 35 percent share of the 300-millimeter (12-inch) silicon wafer market, while Shin-Etsu holds 30 percent, according to Credit Suisse. Japanese companies supply 72 percent of the world's silicon wafers overall, the investment bank added.

The companies also expect power outages in the area to hurt production.

Aside from the nuclear plants, thermal and hydro power plants were also shut down after the earthquake, according to Tokyo Electric Power Co., and it is working to restore power. Nearly a third of its capacity was knocked offline by the earthquake.

The power company started rolling blackouts on Monday, affecting people and companies in northeastern Japan.

Global chip giants including Taiwan Semiconductor (TSMC) and South Korea's Samsung Electronics have said they don't expect any near-term impact from the silicon wafer problem. Chip makers always hold some inventory of wafers and can rely on distributors as well.

But should the current situation continue over the longer term there could be problems.

"Our checks indicate foundries, raw wafer suppliers and distributors have inventory of 1-2 months, so would be impacted if the delay extends out," Credit Suisse said.

 

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