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Electronics Production | March 14, 2011

Further analysis of Japan's DRAM / NAND industry

Further analysis and statements regarding the state of Japan's electronics industry are coming out of the country.

Based on the sources and check of DRAMeXchange, the operation of the primary nuclear power plant in northeastern Japan has come to a stop due to the recent devastating earthquakes. The residents near Fukushima I Nuclear Power Plant have been evacuated. Additionally, Unit #1 and Unit #3 have been infused with Boric acid, so these two units are now completely obsolete. The power supply of northeastern Japan has become a huge issue. Starting from Mar. 14th, the operation of the industrial area in the northeast will be severely affected, and it is expected that limited power supply or complete power outage will continue for the next two weeks. Kantō and the industrial areas in the northeast will be facing limited power supply or complete power outage, but plans on how to distribute already-limited power have been made. What's worth noting is that silicon wafer fabs, Shin-Etsu Semiconductor and SUMCO, are affected most. In addition to damage of their production lines, the power outage has forced the production to come to a stop. The traffic for areas east of Kantō has also been affected. 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. According to DRAMeXchange, Shin-Etsu Semiconductor primarily provides 12" silicon wafer, and 95% of these silicon wafer is for the semiconductor industry. Shin-Etsu Semiconductor is a major wafer silicon supplier to Elpida and Toshiba. Japanese semiconductor companies are still evaluating the current situation. For the spot market, Samsung and Hynix both have also stopped providing price information. For Taiwanese companies, PSC has ceased quoting DRAM spot prices, and is now waiting to learn more about the current situation to make necessary adjustments. Nanya Tech is also waiting to take necessary action after they finished evaluating the situation. The spot price in China has started increasing because the expected supply is likely to be affected. The overall spot market will reflect the market tension after most have returned to their work on Mar. 14. Japan's devastating quake will affect the production of DRAM. Especially for PC and system manufactures, they need to be more proactive in DRAM inventory for the upcoming peak season, so that the outlook for the contract market will start to look rosy. Toshiba's NAND production line, based on DRAMeXchange's investigation, only has a minor setback; however, due to the impact on material supply, traffic, and Japan's basic construction, Toshiba is still trying to evaluate the consequences (likely to come soon). Toshiba's 12" plant in Iwate Prefecture primarily produces logic IC and consumer IC. Due to its close proximity from the epicenter, the production in Iwate Prefecture will be affected severely; the memory production plants in Kansai area report minor damage. The Fab3 and Fab4 of the Flash memory plants by Toshiba and SanDisk have not yet been confirmed to have serious damage, because they are located about 800 miles away from the epicenter. Nevertheless, the production at Fab3 and Fab4 is rather precise and delicate; based on SanDisk's official statement, the production did stop temporarily but no employee was hurt. A more comprehensive damage report is expected to be released today (March 14). Based on past experience, DRAMeXchange believes that manufactures will evaluate their fab equipment and make necessary repair. Although the overall semiconductor production was not severely damaged, the material supply and basic traffic reconstruction will impact more on the supply of semiconductor than production line damage. The overall supply is expected to be affected for the next two weeks due to traffic difficulties.
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