Analyst: Japanese Quake Cuts Silicon Wafer Supply

The massive earthquake in Japan this month has suspended a quarter of the world's production of silicon wafers for semiconductors, hitting memory chips hardest, market research firm IHS iSuppli said in a note on Tuesday.

Because Shin-Etsu Chemical Co stopped manufacturing at one factory and MEMC Electronic Materials shut down production at another Japanese plant, 25 percent of the global silicon wafer supply for semiconductors has gone offline, iSuppli said.

"These companies supply not only domestic Japanese demand for wafers but also semiconductor manufacturers around the world," the U.S.-based research firm said.

"Because of this, the suspension of operations at these plants could have wide-ranging implications beyond the Japanese electronics industry," iSuppli said. "A 25 percent reduction in supply could have a major effect on worldwide semiconductor production."

Supply shortages could translate into shipment delays or higher prices for PCs and consumer electronics as hardware makers seek raw materials form outside Japan.

Damage to factories as well as power disruptions from the quake prompted the shutdowns, iSuppli said.

The Shin-Etsu plant normally makes 300-millimeter wafers for advanced semiconductors with more transistors, iSuppli said, and most were for memory such as flash and DRAM. That means memory chip manufacturers will face the biggest crisis getting raw materials, the note said.

The magnitude 9.0 quake on March 11 also threatens material supplies to global flat panel display makers, analysts and manufacturers say.

Taiwan's economics ministry warned last week of shortages to local high-tech hardware makers, and Bank of America Merrill Lynch said the tech supply chain may take as long as six months to resume pre-quake flows.

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