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Chip prices surge in wake of Japan quake

Nuclear power plant problems force fabs offline

Prices for DRAM and NAND flash memory chips shot up on Monday in the wake of Japan's earthquake and tsunami, as markets displayed concern over fabrication plant shutdowns, power outages and supply chain shortages.

Spot prices for DRAM surged by as much as 7.56% and as much as 20.48% for NAND flash memory chips, according to DRAMeXchange.

Japan represents 35.7% of the world's NAND flash production and 13.6% of DRAM, according to DRAMeXchange's parent company, TrendForce.

According to a survey of IT supply chains by TrendForce, chip fabrication facilities have been "seriously" affected by the 8.9 magnitude quake and subsequent tsunami. Japan faces major obstacles to an economic resurgence, the company said.

For example, Shin-Etsu Semiconductor and SUMCO have shut down production in their silicon wafer fabrication facilities as a result of equipment damage and power outages. Shin-Etsu Semiconductor is a major silicon wafer supplier to memory manufacturers Elpida and Toshiba.

Toshiba's NAND flash production has experienced only a "minor setback", according to DRAMeXchange, but because of the impact on material supply and traffic, Toshiba is still evaluating the consequences.

"Due to its close proximity to the epicentre, production in Iwate Prefecture will be affected severely; the memory production plants in the Kansai area have minor damage," DRAMeXchange stated.

TrendForce cited ongoing problems nuclear power plants, including the shutdown of Fukushima 1, Japan's primary plant. "The residents near Fukushima I Nuclear Power Plant have been evacuated. Additionally, Unit #1 and Unit #3 of the plant have been infused with Boric acid, so these two units are now completely obsolete," it said.

"The power supply of northeastern Japan has become a huge issue," TrendForce stated. "As a result, the supply for silicon wafer will drop significantly, which will cause the global semiconductor players outside of Japan to compete for material."

On Friday, semiconductor market research firm iSuppli voiced similar concerns that silicon wafer production would suffer in the aftermath of the earthquake and tsunami.

For the spot market, NAND flash memory makers Samsung and Hynix have stopped providing price information. Samsung is the world's largest supplier of NAND flash chips. The spot price for NAND flash and DRAM in China has also started increasing because the expected supply is likely to be affected, TrendForce stated.

Toshiba and SanDisk's two major fabrication facilities, Fab 3 and Fab 4, are 800 miles away from the earthquake's epicentre, and production was still "delicate." Based on SanDisk's official statement, production was stopped temporarily and no employees were hurt in the quake, TrendForce said.

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