Global semiconductor shipments may increase at a slower-than-expected rate this year as the Japan earthquake disrupts production of materials, Bank of America Merrill Lynch said.
Quake-induced plant closures at producers of semiconductor wafers including Shin-Etsu Chemical Co. and Sumco Corp. (3436) may have led to the temporary loss of 30 percent of global capacity, Merrill Lynch analysts including Daniel Heyler wrote in a report yesterday. Global chip demand this year may expand between 2 percent to 3 percent less than the brokerage previously projected, according to the report.
The disruption in supplies of wafers may prompt chipmakers including Taiwan Semiconductor Manufacturing Co. to find alternative vendors to fill the shortfall, Merrill Lynch said. The record magnitude-9 quake on March 11 and ensuing 20-foot tsunamis also disrupted production of other materials such as substrates and components used in hard-disk drives, it said.
Merrill Lynch expects supply disruptions will result in some technology companies missing earnings projections in the second and third quarters, according to the report.
Taiwan Semiconductor, the world’s biggest maker of customized chips, can turn to wafer suppliers including MEMC Electronic Materials Inc. (WFR) and Siltronic AG to make up any shortfall, the report said, citing Chief Executive Officer Morris Chang.
MEMC, based in St. Peters, Missouri, is expected to benefit as chipmakers seek alternative wafer suppliers, Merrill Lynch said. The U.S. company, which suspended production at its plant in Utsunomiya in Japan following the quake, has a total of 12 manufacturing sites globally. Its shares rose 11 percent in New York trading on March 14.
Hynix Semiconductor Inc. (000660), the world’s second-largest maker of computer-memory chips, is increasing orders for silicon wafers to preempt any possible shortage of the material, Park Hyun, a spokesman for the Ichon, South Korea-based company, said by telephone today.
Substrate makers including Mitsubishi Gas Chemical Co. and Hitachi Chemical Co. halted production at some sites after the earthquake, according to Merrill Lynch. Kobe Steel Ltd. (5406) and Furukawa Denko, makers of materials for hard disks, had facilities that were damaged by the quake, the brokerage said.
The expected shortfall in semiconductor shipments this year “should be made up in 2012” because of pent-up demand from consumers and inventory restocking, according to Merrill Lynch.
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