Updated DRAM/NAND Price Data After Japan Quake (MU, SNDK)

It turns out that the 9.0-magnitude earthquake in Japan and the tsunami which followed has been shown to have more of a quantified impact on the DRAM markets in memory other than just what the companies have been saying individually.  DRAMexchange said this morning that the second half of March DDR3 contract prices increased by over 3% on average and 2GB average prices increased to $17.00.  More importantly, DRAMeXchange expects April DRAM contract price hikes to continue with the back-to-school buying demand in European and American markets.

The aftermath of the quake has led to a shortage in the raw material commonly used in the semiconductor industry. The report noted, “Hitachi Chemical and Mitsubishi Gas Chemical, two companies producing over 80% 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.”  The worldwide Raw-Wafer supply was estimated to be reduced by as much as 20% to 25%. 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.

Due to a potential Raw-Wafer shortage, PC-OEMs have actively increased the DRAM inventory level for future demand and that led to an increasing contract price in March: DDR3 2GB contract price increased by just over 3% from $16.50 to $17.00 and DDR3 4GB rose just over 3.1% from $32.00 to $33.00.  The only implied good news to come from this is that the Japanese market accounted for only 5% of the global Notebook market.

Micron Technology Inc. (NASDAQ: MU) is apparently in the clear as well as its Raw-Wafers mainly come from America, so Micron was barely affected by the quake.

Samsung has five other Raw-Wafer suppliers located in America, Japan and Korea. Its supply chain was hardly affected. Hynix was affected locally but DRAMexchange believes it can be met by other suppliers.

While NAND is not DRAM, it is now believed that SanDisk Corporation (NASDAQ: SNDK) had little disruptive impact to its Fab 3/4 in Japan in its venture with Toshiba Corporation.

Micron shares opened slightly lower and is t $10.32 and its shares were at $10.24 before the real quake fallout hit the markets.  SanDisk shares opened and are down slightly by 0.5% at $43.25 and its shares were around $45.00 right before the Japan quake fallout began killing the markets.

JON C. OGG