Effected by Japan earthquake, 2H March DDR3 contract prices increased by over 3 percent on average; 2GB average prices increased to $17

TAUWAN: According to DRAMeXchange, a research department of TrendForce, northeast Japan earthquake has led to a shortage in raw material commonly used in the semiconductor industry. Especially, due to suspended production capacity at Shin-Etsu plants in Fukushima and SUMCO plant in Yamagata, the worldwide Raw-Wafer supply was estimated to be reduced by 20-25 percent.

With the Fukushima nuclear power plant under control, the restart date of production remained uncertain because the limited electricity will be prioritized in transportation and civilian utility. Given the potential Raw-Wafer shortage, PC-OEMs have actively increased the DRAM inventory level for future demand.

Increasing demand for DRAM led to an increasing contract price in March. DDR3 2GB contract price increased by 3.03 percent from $16.5 to $17 ($0.91/Gb) while DDR3 4GB increased by 3.13 percent from $32 to $33. Despite the devastating quake in Japan, Japanese market accounted for merely 5 percent of the global notebook market.

DRAMeXchange expects April DRAM contract price to continue to increase with the back-to-school buying demand in European and American markets.

DRAM supply chain affected; manufacturers with abundant raw materials will prosper
The magnitude 9.0 quake hit northeastern Japan on March 11th has left thousands of people homeless and damaged DRAM supply chain. The suspended Shin-Etsu and SUMCO northeastern plants have reduced global Raw-Wafer capacity by 20 to 25%.

Hitachi Chemical and Mitsubishi Gas Chemical, two companies producing over 80 percent of BT resin used in module houses, were also affected by the quake. Other key raw materials such as photo-resistor, target and Nitrogen were also affected. Following the quake, DRAM vendors checked the inventory level on raw materials, confirmed on the possibility of second supply source in order to reduce loss.

According to DRAMeXchange, Samsung has five other Raw-Wafer suppliers located in America, Japan and Korea. Therefore, Samsung’s raw material supply chain was barely affected. On the other hand, Hynix’s Raw-Wafer supply was mainly from Shin-Etsu. However, despite of Shin-Etsu’s suspended plant in Fukushima, other plants and suppliers can effortlessly meet Hynix’s demand in Raw-Wafer.

Micron’s Raw- Wafer was mainly from America, so Micron was barely affected by the quake. Elpida and Rexchip, with large share of supply from the affected plants, have started to negotiate Raw-Wafer purchase from other vendors. Elpida and Rexchip, with one month of inventory level left, will keep a close watch on the recovery progress of the Shin-Etsu plants.

As for Taiwanese DRAM vendors, Powerchip also had four Raw-Wafer suppliers. Shin- Etsu’s portion can be compensated by the other three vendors. Nanya and Inotera were not affected with the Raw-Wafer material mainly from FST, a joint venture of Formosa Plastic and SUMCO. Furthermore, BT resin can also be purchased from a Taiwanese company called Formosa Plastic. ProMOS’s Raw-Wafer sources are all from Taiwan except the DDR3 wafer from Shin-Etsu. The lacked portion can be fulfilled by other cooperating suppliers. Winbond also was not affected due to its diversified three Raw-Wafer suppliers.