But product availability may not be as disruptions hit mostly consumer electronics supply chain
The earthquake and tsunami in Japan could result in significant shortages of certain electronic components, potentially leading to a price hike for these devices and the products that use them. According to market research firm IHS iSuppli, impacts on the transportation and power infrastructure in Japan will result in disruptions of supply, resulting in the short supply and rising prices. This is irrespective of any damage to component production facilities themselves.
Luckily, most of country’s largest electronic component producers operate far to the south of the epicenter of the quake and the areas most impacted by the tsunami, so damage was negligible, IHS iSuppli reports. But according to a quake bulletin this week from investment firm Ticonderoga Securities, Texas Instruments is reporting “substantial damage” at its production plant in Miho, Japan.
The Miho plant is responsible for producing approximately 10% of the company’s 2010 output, Ticonderoga reports. The company is currently transferring production to other facilities until Miho comes back online, which is expected in mid-summer.
Companies with negligible damage to operations will, however, face problems shipping components, receiving raw materials and getting workers to their facilities; and power interruptions also are slowing production, according to IHS iSuppli.
Components impacted are those used widely in the consumer electronics marketplace, and in laptops, PCs and servers: NAND flash memory, dynamic random access memory (DRAM), microcontrollers, standard logic, liquid-crystal display (LCD) panels, and LCD parts and materials, according to IHS iSuppli. Japan also is the world’s largest supplier of silicon used to make semiconductor chips, accounting for about 60% of the global total, the firm states.
But networking equipment is less likely to be impacted. Cisco and its customers know the effect of component shortage all too well. Nonetheless, the Japan quake’s impact on the electronics industry hit Cisco’s stock that of other tech heavyweights.
Shortages and the impact on pricing will last until the third quarter, IHS iSuppli states. They’ll start to appear at the end of March or early April as the global supply chain works off two weeks of excess inventory.
The psychological impact of the quake has already led to a 10% price hike in flash memory on the spot market, IHS iSuppli says. Spot-market DRAM pricing also is surging, rising by as much as 7% since Friday.
But DRAM pricing for contract OEMs is holding steady, the firm states, and is expected to do so until the supply chain moves past the infrastructure challenges.
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