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Japan’s Disaster Sparks Serious Tech Supply Shortage Concerns

As if Japan didn’t have enough problems. Its economy may take decades to recover. But the related consequences on a global scale for technology and consumer electronics could equally devastating. Components such as memory chips and liquid crystal displays that are used in consumer electronics ranging from smartphones to televisions will likely be in short supply in the weeks ahead. This could have huge supply and economic implications for companies like Motorola, Apple, HTC, Samsung, Vizio, Sony and many others both in OEM and Retail.

I remember back several years ago when a memory chip manufacturer’s facility in Taiwan caught fire and burn to the ground. That single event raised the price of RAM to huge levels. In the current case, Japan is home to several memory chip makers, including Elpida Memory Inc. and Toshiba Corp., the world’s second-largest NAND flash memory chip producer by revenue after Samsung Electronics Co. of South Korea. Obviously, this is a very volatile industry with a select group of manufactures, most located in Japan, Taiwan, or Korea.

To underscore my point, “We expect phenomenal price swings and large near-term shortages as a result of this earthquake,” said Jim Handy, an analyst at Objective Analysis. “Over 40% of the world’s NAND flash … are manufactured in Japan. It doesn’t take a large production decrease to cause prices to increase dramatically.” All I can say is what a mess. Humanitarian crises, energy crisis, economic crisis all on unprecedented levels and that’s just in Japan. The fragile world economy can not sustain huge hits like this without major economic repercussions. I fear, we are only at the beginning of the economic aftershock of this catastrophe for both the people of Japan and the world.

The WSJ has a very interesting article on this topic. Check it out here!

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Written by David Frederick

March 15, 2011 at 10:07 AM

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