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IHS iSuppli: Expect Component Shortages, Price Hikes

3/21/2011 12:01:00 AM Eastern

NEW YORK – IHS iSuppli is reporting the catastrophe in
Japan could result in significant shortages of certain electronic
components, potentially causing pricing for these
devices to increase dramatically.

The research firm said there are few reports so far of
actual damage to CE production facilities in Japan, but
the impacts on the transportation and power infrastructure
will result in disruptions of supply.

Among the components expected to be in short supply
and have higher prices will include NAND flash memory,
dynamic random access memory (DRAM), microcontrollers,
standard logic, LCD panels, and LCD parts and
materials, IHS iSuppli said.

Japan also is the world’s largest supplier of silicon used
to make semiconductor chips — at about 60 percent of
the global total, the research firm said. If this supply is disrupted
due to the logistical and infrastructure challenges
Japan is facing, this will have an impact not only on NAND
flash memory, DRAM, microcontrollers, standard logic,
LCD panels and LCD parts, it will also affect other families
of products such as discretes, i.e. MOSFETs, bipolar
transistors and small signal transistors.

Infrastructure challenges will slow or suspend shipments
from Japan during the next two weeks, the firm
said. 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. Just the same, these shortages
and their price impact are likely to linger until the
third quarter.

Before the disaster, semiconductor inventories in the
global semiconductor supply chain were at high levels,
IHS iSuppli said.

Pricing for higher-density NAND flash already has
climbed by as much as 10 percent on the spot market,
which buyers use to procure relatively small quantities of
parts. However, IHS does not expect price volatility for
OEM DRAM customers, and it is likely that the average
selling price for major OEM customers on the contract
market will hold steady for sustained periods of time until
the supply chain moves past the infrastructure challenges.

Spot-market DRAM pricing also is surging, rising by as
much as 7 percent since March 11, but contract pricing is
holding steady.