Japan Earthquake Suspends 25% of World Silicon, ISuppli Says

The semiconductor industry faces possible shortages of silicon after the Japan earthquake caused suspension of 25 percent of the world’s production of the material key to manufacturing chips, IHS iSuppli said.

Plants owned by Shin-Etsu Chemical Co. and MEMC Electronic Materials Inc. (WFR) are out of action for the “near term,” the El Segundo, California-based market analysis firm said today in a statement.

“Suspension of operations at these plants could have wide- ranging implications beyond the Japanese electronics industry,” iSuppli said. “A 25 percent reduction in supply could have a major effect on worldwide semiconductor production.”

The silicon wafers produced at the plants are mainly used by makers of memory chips, according to iSuppli. South Korea’s Samsung Electronics Co. is the world’s largest maker of those products.

Shin-Etsu said March 17 that there was damage to its Shirakawa plant and that it is unclear how long it will take to restore operations. The company intends to set up production elsewhere, it said. ISuppli said that facility accounts for 20 percent of world output.

MEMC’s Utsunomiya plant had been evacuated and operations suspended as of March 17, according to the company. That factory produces 5 percent of world output, according to iSuppli.

All chips used in computers and other electronic devices are produced by building up layers of chemicals and metals on disks of silicon.

MEMC shares rose 19 cents, or 1.5 percent, to $12.50 at 12:40 p.m. on the New York Stock Exchange.

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net;

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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