There is sometimes a silver lining in any tragedy.  After disasters, rebuilding takes place.  Factory disruptions in one land can mean a boost in business in another land.  That is the global economy at work, and YES this is about Japan and its tragedy and how this is helping some and hurting others.  With today being the end of the first calendar quarter, companies either already know or will know very soon if the first quarter came out okay and whether the second quarter will be much higher or lower than expectations.

DRAMeXchange.com sent out its weekly research in the middle of the night and there are some broad implications here in both DRAM and NAND Flash for companies such as SanDisk Corporation (NASDAQ: SNDK) and Micron Technology Inc. (NASDAQ: MU).  We are also considering some changes that could help or hurt Intel Corporation (NASDAQ: INTC) and NVIDIA Corporation (NASDAQ: NVDA) as they get into devices behind QUALCOMM Incorporated (NASDAQ: QCOM) and ARM Holdings plc (NASDAQ: ARMH) due to the gains that these companies had made in smartphones and in other devices before Japan’s woes came into play.  The moves in the shares of each of these have not exactly been universal as you will see below.  Some are winners, some are losers.

The research noted, “In 2Q, uncertainty factors will continue to affect the demand and supply in NAND Flash market. In regard to supply: 1.) On account of the fact that the loss of WIPs at Toshiba and SanDisk’s Yokkaichi plants and that a possible shortage of silicon wafer supply in the second half of 2Q, DRAMeXchange estimates the bit output of Yokkaichi plants  will decrease  up to 10% in 2Q, which will likely cause up to 4% decrease in global NAND Flash bit output in 2Q.”

We have to also include MEMC Electronic Materials Inc. (NYSE: WFR) as DRAMexchange noted, “As for the supply of upstream silicon wafer in 2Q, the shutdown of Shin-Etsu Chemical’s Shirakawa plant will cause significant harm, because its capacity accounts for about 20% of global silicon wafer capacity. Due to equipment examination and electrical brownouts, there is still no definite date for its production to resume. As for SUMCO’s Yonezawa plant and MEMC’s Utsunomiya plant, although they are temporary shut down due to electrical brownouts, but their capacities are comparatively smaller, so the effects they cause to silicon wafer supply in 2Q are limited.”

When it comes to materials, the research noted “Mitsubishi Gas Chemical and Hitachi Chemical, the main suppliers of BT resin used in semiconductor products, plan to resume part of their production lines in affected areas at the end of March. Therefore, DRAMeXchange expects the shortage effects on BT resin supply to be eased in the beginning of May.”

Why does this matter so much for Intel Corporation (NASDAQ: INTC) and NVIDIA Corporation (NASDAQ: NVDA)?  Without stating the obvious, any delays of new tablets will not slow down the manufacturers from continuing to develop second-generations of their tablets, smartphones, and other devices.  Intel and NVIDIA are both coming late into the consumer electronic devices market.  We cannot argue that this will give the companies a huge leg up to competing against ARM Holdings plc (NASDAQ: ARMH) and QUALCOMM Incorporated (NASDAQ: QCOM).  There are still just too many moving parts to predict if there is going to be any real market share changes.

With companies having to slow down on production of certain devices and having to delay even a quarter, there is a chance here that there will be some new winners and losers.

ARM Holdings plc (NASDAQ: ARMH) saw its shares whip around this month with the markets.  These ADRs ended February at $30.25 and shares were under $25.00 by March 15.  This morning we have the ADRs trading at $28.25 after a 2.6% gain.  QUALCOMM Incorporated (NASDAQ: QCOM) ended February at $59.58 and shares are currently at $54.75 after a 0.4% gain this morning.

If Intel Corporation (NASDAQ: INTC) is going to get any added benefits, it is just not being reflected in its stock even if the market strength has been resilient.  Intel shares ended February at $21.47 and shares have remained weak despite a rising market.  The stock is currently just under $20.00 at $19.97 after a 2.4% drop this morning.  NVIDIA Corporation (NASDAQ: NVDA) ended February at $22.66 and even though shares have recovered some with the market in the last two weeks, this one is only at $18.52 with a 0.4% gain this morning.

SanDisk Corporation (NASDAQ: SNDK) closed out February at $49.60 and shares closed as low as $42.09 after the quake.  After a 0.85% gain this morning, the stock is back up to $45.80.  Micron Technology Inc. (NASDAQ: MU) closed out February at $11.13 and shares did hit as low as $9.93 on the March 10 close.  Shares today are back up to $11.56 even after a 0.2% drop this morning.

MEMC Electronic Materials Inc. (NYSE: WFR) has somehow managed to feel like it was less volatile than any of the other companies mentioned due to its lower share price.  MEMC closed out February at $13.57 and hit $12.02 on March 11 and closed at $12.18 as recently as March 22.  After a 0.45% gain this morning we have WEMC shares trading at $13.04.

Supply issues are one thing, but demand is on the other side of the equation. Demand remains high while supply disruptions have prevailed.  So prices paid and prices realized may save the day or wreck the day for any of these companies.  DRAMeXchange noted that average selling prices of mainstream NAND Flash increased by 5% to 15% in March due to the Japan earthquake.  A rise of 5% to 15% in prices will make a difference to many companies less affected by the quake.  If we are going to get warnings and raises in revenue and earnings guidance, this is the last day of the quarter and companies should know very soon (if they do not already) what their calendar Q1 quarter came to be and how their situation is looking into calendar Q2.

Stay tuned.

JON C. OGG

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