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Chip prices soar after Japan quake

Microchips and other key technology components saw significant price gains on Tuesday, as the effects of the disruption caused by Friday's devastating earthquake continued to impact on supply from Japan.

The prospect of prolonged supply disruptions sent global companies scrambling for alternative sources of high-tech components in particular, a sector where Japan is still a dominant player.

Dozens of Japanese firms from component makers to electronics firms and automakers are keeping their plants shuttered, according to Reuters, while damage to infrastructure including power, roads, rails and ports will take months to repair.

Meanwhile, the BBC is reporting a speech from Japan's Prime Minister Naoto Kan, in which he warns the shutdown of several nuclear reactors is likely to lead to a shortfall in electricity supply.

As result of these conditions, production and distribution at technology companies in Japan is reported to have been hit hard. Japan accounts for one-fifth of the world's semiconductor production, including about 40% of flash memory chips used in everything from smartphones, tablets to computers.

"Components impacted will include NAND flash memory, dynamic random access memory (DRAM), microcontrollers, standard logic, liquid-crystal display (LCD) panels, and LCD parts and materials," said research firm IHS iSuppli.

Spot prices of NAND flash chips, which are components in such products as Apple's iPad2, extended their gains on Tuesday, rising nearly 3% after a 20% jump on Monday, while DRAM memory chip prices gained 0.2% on top of a 7% on Monday, according to price tracker DRAMeXchange.

"Even if shipments of semiconductor parts affected by the quake were disrupted for only two weeks, shortages and their price impact were likely to linger until the third quarter," iSuppli said in a statement.

"While there are few reports of actual damage at electronic production facilities, impacts on the transportation and power infrastructure will result in disruptions of supply, resulting in the short supply and rising prices.

"Suppliers are likely to encounter difficulties in getting raw materials supplied and distributed and shipping products out. This is likely to cause some disruption in semiconductor supplies from Japan during the next two weeks."