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Japan disasters may ripple in NZ channels

Japan disasters may ripple in NZ channels

Distributors in New Zealand have not felt the impact of the March 11 earthquake, tsunami and nuclear catastrophes on pricing or availability, despite the large number of ITC components manufactured in Japan.

Analysts and observers have widely commented that Japan accounts for significant percentages of global manufacturing for certain components. Pricing was already being affected on commodity markets within days of the disasters, whose death toll in human terms has reached unfathomable levels.

But what impact manufacturing disruption will have on the New Zealand technology market in general will still not be fully realised until at least the end of April or early May, several sources have commented.

“It is early days and clearly most of the ‘food-chain’ will be well-supplied for the moment,” says Renaissance chief marketing officer Warwick Grey. “It is more likely something may happen in a month, six weeks as inventory runs down and it’s time to re-order. Normally that is how long it takes to flush through inventory.”

IDG News Services reported on March 21 that the price of NAND flash memory — the main data storage in iPads, iPhones and other mobile devices — had increased by as much as 20 percent since the earthquake struck. The NAND market reacted strongly because Japan supplies as much as 40 percent of the world’s NAND flash chips, according to Jim Handy , at Objective Analysis.

Chip factories where Toshiba makes NAND flash memory are in Yokkaichi City, Japan, around 500 miles away from the earthquake’s epicentre and the area hit by the tsunami.

“Two [factories] temporarily stopped operations on March 11, but afterward resumed operation and are now operating normally,” Toshiba said. “We are still carefully examining any possible impact on the production equipment caused by the earthquake, but the effect so far is minimal.”

New Zealand country manager for Australia-based distributor Cellnet, Dave Clark, added that as much as 15 percent of the world’s DRAM is manufactured in Japan as well. Cellnet, like other distributors, has not received any dire warnings about supplies from vendor partners, says Clark.

Some vendors say the impact here should be short-lived.

“There will be short-term price volatility due to disruption in DRAM/NAND Flash supply from Japan,” says Teddy Lin, ASEAN and Oceania regional manager for Transcend, a manufacturer of memory upgrades for digital cameras, desktops, notebook PCs, servers, workstations and video games.

“Shortage of chip supply will affect some module manufacturers more than others depending on their procurement model. This is less of a problem for Transcend, as we have strong relationships with Samsung in terms of DRAM and NAND flash chip supplies. Overall this year we [expect to] see a greater surge in demand for NAND flash compared to DRAM due to the continued expansion of smart phone and tablet market, hence a more stable to upward pricing is expected for flash products.”

In addition to its role as a chip manufacturer, Japan is also a centre for hard disk drive manufacturing, with Showa Denko, accounting for 25 percent of global share of the hard disk market, according to Digitimes, an Asian tech industry news and research organisation. Showa Denko shut down two plants in Japan, Digitimes reports, but since it also has production lines in other countries, it can compensate for disruptions.

In addition to this, IDG has reported that several factories have come back online as of March 23.


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