By Niklas Pollard and Tarmo Virki
STOCKHOLM/HELSINKI |
Wed Mar 16, 2011 7:19am EDT
STOCKHOLM/HELSINKI (Reuters) – Top mobile telecom equipment makers Ericsson and Alcatel-Lucent are braced for a supply squeeze following Japan’s earthquake, adding to fears for a sector hampered by shortages.
Japan, a dominant chip industry player with around a fifth of the world’s semiconductor production, has seen factories producing everything from chips to car parts closed following Friday’s earthquake, threatening supplies to manufacturers across the globe.
Many are making contingency plans and trying to source key components elsewhere, while working out how much inventory they have available to keep production going and for how long.
“It is reasonable to expect that the events in Japan will affect supply of components but it is too early to say to what extent,” Ericsson said on Wednesday.
Analysts have said if the supply chain were broken for even a few weeks, the impact could be felt in higher prices or shortages of gadgets such as Apple’s iPad and other tablets, smartphones and computers for months to come.
“Pretty much everything is halted or mostly halted through April … Even before the crisis the industry was near capacity. I would expect an impact to Q1 because of the remainder of March and also for Q2 because of all of April,” Earl Lum, head of telecom gear and component research firm EJL Wireless, said.
Even if damage to electronic production facilities turned out to be limited, power and transport disruption could result in significant shortages of electronic parts and lead to big price hikes, research firm IHS iSuppli said.
NAND flash memory chips used in the fast-growing mobile devices market, dynamic random access memory (DRAM), microcontrollers, standard logic, liquid-crystal display (LCD) panels, and LCD parts and materials could all be hit.
That would spell particularly bad news for a telecom equipment-making sector already suffering from shortages.
In January, Nokia Siemens chief executive Rajeev Suri told Reuters component supply was tight for the industry and it would take a couple more quarters to get back to normal.
MEMORY GAP
Ericsson said while it was too early to get an accurate picture of how Japanese enterprises were affected, it did not expect the disaster to have a material impact on first-quarter sales, adding it had no reports of injured or missing employees.
Ericsson made no mention of Sony Ericsson, its joint venture with Japanese group Sony, which makes mobile handsets. Sony Ericsson was not available for comment.
French company Alcatel-Lucent said while it did not manufacture equipment in Japan, it depended on suppliers there for components such as memory.
“We … believe that there will be an impact on our industry given the importance of the disaster … the situation is not yet stabilized and we are still assessing the consequences so we cannot say what this impact will be,” a spokesman said.
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