The supply of NAND flash will be down around 30% in two months time, according to investment bankers JP Morgan.
A note from the bank’s analysts reads: ‘We estimate that Japanese NAND output will be reduced by ~30% in two months time. Further, the NAND market was supply constrained even before the earthquake due to rising smartphone and tablet demand.’
The note continues: ‘The NAND market will likely remain supply-constrained for several months, and contract prices will likely continue to rise in the near term (spot prices are up 15% since the earthquake).’
The bank’s analysts point out that Apple has one of the largest exposures to NAND at around 10% of total cost of sales.
Howver Apple is used to paying up-front for NAND supplies and may well have contractual conditions which would make it costly for suppliers to fail to deliver.
Whatever the circumstances, Apple will be a priority customer, and that will only make things worse for other customers.
Toshiba had about 40% NAND market share before the earthquake hit. Its NAND fabs are at Yokkaichi, about 200 miles South of Tokyo and about 600 miles south of the worst hit earthquake areas.
Although Toshiba has not made any statement about the state of its NAND output, it is likely that the original earthquake, the continuing tremors and the persistent power outages will have affected its ability to supply customers.
In a market that was tight before the earthquake, any interruption will have a substantial effect on the consumer electronics market where all portable devices rely on NAND for memory storage.
The wild card is how much NAND market leader Samsung can do to boost NAND production to make up any shortfall. Bearing in mind it takes three months to make a chip, even if Samsung increased NAND wafer starts by 30% immediately after the earthquake hit, it will be the second week in July before that extra product reaches the market.