Japan quake hits product supply chain

FEARS over a significant shortage of components needed by manufacturers worldwide due to Japan’s devastating earthquake and tsunami saw prices for key technology parts surge higher yesterday.

Japan is a dominant chip industry player, with around one-fifth of the world’s semiconductor production.

Spot prices of NAND flash memory chips used in the fast-growing mobile devices market, rose nearly three per cent yesterday after a 20 per cent jump on Monday, while dynamic random access memory (DRAM), microcontrollers chip prices gained 0.2 per cent on top of a seven per cent rise on Monday.

Demand for NAND flash memory chips has been surging, led by mobile devices and tablets like Apple’s iPad 2. Apple said yesterday it was delaying the launch of its iPad 2 tablet in Japan after the disaster, but it did not say it was due to supply problems.

The disaster has struck transport and power supplies in the country hard, resulting in factory closures and disrupted deliveries.

Research provider IHS iSuppli warned of “significant” shortages for certain components and a knock on impact for companies worldwide.

Analyst Dale Ford said: “While there are few reports of actual damage at electronic production facilities, impacts on the transportation and power infrastructure will result in disruptions of supply, resulting in short supply and rising prices.”