Japanese DRAM makers' woes echo rest of industry after quake

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 percent, 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 percent 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.

MEMC, a U.S. company, shut operations at its factory in Utsunomiya, Japan, after the earthquake and said it expected "shipments from this facility will be delayed over the near term." The factory is far from locations hit by the tsunami, but is within the rolling blackout area.

Without reliable power and with transportation still disrupted by earthquake and tsunami damage, the supply of wafers from these companies will continue to be affected. Chips are the building blocks of all electronic devices.

Renesas Technology, another Japanese chip maker, said on Monday that it does not expect production at its chip fabrication plant in Hitachinaka, Ibaraki prefecture, to begin until July, and then it will only be at part of the plant. The company had said part of its electric supply had been restored so it has been assessing the status of the plant.

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