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Flash, DRAM prices spike on worries over supplies from Japan

By Dan Nystedt
March 15, 2011 07:26 AM ET

IDG News Service - 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.

But major Japanese suppliers have said factories producing these chips were largely unaffected by the temblor, nor are they in areas where blackouts will force production to stop. While it appears by their statements that the memory markets are overreacting to the earthquake, analysts say that the price increases may highlight a graver issue for the global chip industry: damage to Japanese component and material suppliers vital to chip production.

The price of NAND flash memory, which has grown in importance as the main data storage in iPads, iPhones and other mobile devices, has increased by as much as 20 percent since the earthquake struck as companies try to figure out if chip factories in the area were damaged.

Although prices rose, not many people were selling, according to DRAMeXchange, which runs an online clearinghouse for NAND, DRAM and other chips. Most companies seemed more interested in keeping their supplies of the chips instead of taking a quick profit.

The NAND market has reacted so strongly because Japan supplies as much as 40 percent of the world's NAND flash chips, according to Jim Handy , at Objective Analysis.

Toshiba, one of the biggest NAND suppliers in the world, said none of its NAND flash memory factories were hurt by the earthquake or tsunami.

The company's only chip factory in the area of the earthquake is in Kitakami City, Iwate prefecture, and produces logic chips, not memory chips. Production at the factory stopped as soon as the earthquake hit and it remains out of operation, Toshiba said.

The chip factories where Toshiba makes NAND flash memory are in Yokkaichi City, Japan, around 500 miles away from the earthquake's epicenter and the area hit by the tsunami.

"Two (factories) temporarily stopped operations on March 11, Japan time, but afterward resumed operation and are now operating normally," Toshiba said. "We are still carefully examining any possible impact on the production equipment caused by the earthquake but the effect so far is minimal."

Prices of DRAM, the most widely made memory chips used in PCs, laptops and servers, surged 7 percent after the earthquake was reported, according to market researcher iSuppli, and then settled down.

Elpida Memory, Japan's only major DRAM maker, has said its DRAM factories weren't affected by the earthquake. The company's main chip factory is in Hiroshima, in the southwest of Japan, well over 500 miles away from the earthquake.

While Japanese factories producing NAND and DRAM appear to have made it through the earthquake relatively unscathed, some of the world's largest suppliers of key materials used in chip production, such as the silicon wafers that chips are etched onto, have had to halt production.

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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