Japanese DRAM makers' woes echo rest of industry after quake

IDG News Service - Japanese DRAM maker Elpida Memory on Monday said its factories are operating "at close to normal levels" two weeks after the 9.0-magnitude earthquake in Japan, and that it has "sufficient parts and materials to continue supplying out customers as usual until the end of July."

Although the company said it is in discussions to secure further materials after July and doesn't expect any interruption to its business, Elpida will find itself competing against a growing number of chip makers seeking the same materials, 300-millimeter (12-inch) silicon wafers. The earthquake and resulting tsunami have affected production at key factories making these wafers, the raw materials that chips are etched onto.

Market researcher IHS iSuppli estimates that damage to these factories could reduce the supply of silicon wafers globally by 25%, which "could have a major effect on worldwide semiconductor production," particularly DRAM chips. Compounding earthquake and tsunami damage, other chip factories are being hurt by rolling blackouts meant to share electricity made scarce because several power plants were knocked offline in the disaster.

DRAM is required for nearly every PC, laptop, smartphone and tablet produced, while all gadgets need a host of chips to run different internal functions.

"Elpida pledges to continue making every effort to ensure that our customers have a stable supply of products," the company said.

At least three major suppliers of silicon wafers, Sumco, Shin-Etsu Chemical and MEMC Electronic Materials, lost some output due to the disaster. Sumco and Shin-Etsu alone account for 72% of all 300mm silicon wafers, according to Credit Suisse, the investment bank.

Sumco, the world's biggest supplier of 300mm wafers, said Monday that it has begun repairs at a factory in Yonezawa, Japan, that has been shut since the earthquake. The company did not say when the plant may be running again, but noted that its six other factories in Japan are located far from the disaster area, suffered no damage, and remain in full production.

The company's biggest rival and the world's second-biggest supplier of 300mm silicon wafers, Shin-Etsu, said Friday that production at two of its factories remains "wholly halted".

One of the factories, its Shirakawa plant, suffered damage to production facilities and equipment and it is unclear how long it will take to restore it, Shin-Etsu said. The other factory, its Kashima plant, will remain closed until "heavy damage" to the Kashima industrial park has been repaired, the company said.

"Furthermore, the rolling blackouts implemented by Tokyo Electric Power Company and Tohoku-Electric Power Co. are affecting the operations at Shin-Etsu Group's production sites located in their respective electric power supply areas," Shin-Etsu said. It has at least two other factories in the affected area.