A cloud is looming over the semiconductor industry due to a possible supply shortage of silicon wafers, and the market for popular consumer electronics products such as tablet PCs and smartphones could depend on NAND flash supply. According to sources from the memory industry, supply in March and April should be sufficient, but if silicon wafer output does not improve in May, Apple and other first-tier CE vendors will likely receive shipment priority.
Toshiba, a major NAND flash chip supplier, has reported little impact on its memory business from the Japan earthquake and tsunami. The company's main factory site for NAND chip production is located in Yokkaichi, Mie Prefecture, which is far from the northeastern regions struck by the earthquake. The NAND facility shut down production only briefly due to the quake.
However, the sources pointed out, Toshiba's production is likely to be impacted by tight supply of components and materials used to produce memory chips. There is growing concern about possible interruptions in the supply of blank wafers, photoresists, polishing slurries, target materials and nitrogen gas, because major suppliers of these upstream parts locate their production lines within the earthquake-ravaged areas.
With wafer supplies likely becoming tight, major chip suppliers' intentions to give priority to the long-term contracts from first-tier brands will become more apparent, the sources believe. Second-tier and China's white-box CE companies could encounter tight supply.
Both Shin-Etsu Handotai (SEH) and Sumco have revealed plans to shift production at their damaged plants to other factory sites that were not affected by the recent disaster in Japan. SEH will set up production systems at other plants of Shin-Etsu group while its main facility in Fukushima Prefecture remains closed, according to a company statement issued on March 22. Sumco earlier last week indicated that due to the continued shutdown of its plant in Yamagata Prefecture, production at the facility would be shifted to other plants in the Kyushu region.