Hynix sees no immediate impact from Japan quake

CIOL Bureau
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ICHEON, SOUTH KOREA: Hynix Semiconductor Inc , the world's No.2 memory chip maker, expected on Wednesday little immediate impact on chip wafer supplies from Japan's devastating earthquake but warned that an extended crisis may hit its core customers.


"We have ample supply of wafer inventory and there won't be any immediate impact (from the quake) as non-Japanese suppliers have enough extra capacity for more production," Hynix CEO O.C. Kwon told reporters.

"Should the crisis continue to more than one or two months, however, it could affect inventories of our customers such as computers, tablets and smartphone makers, because they also depend heavily on Japan for parts supplies."

The earthquake and tsunami that hit Japan March 11 crippled wafer production from major Japanese firms such as Shin-Etsu Chemical , the world's largest maker of the chip substrate.


Kwon said Hynix had around 45 days of wafer inventory and was reassured by quake-hit Japanese raw materials firms that there wouldn't be any major disruptions in wafer supplies.

Analysts say that Shin-Etsu and Sumco account for more than 60 per cent of Hynix's wafer needs, with LG Siltron and Germany's Siltronic rounding out the list of suppliers.

Disruptions to production and delivery of components continue to weigh on the global tech sector more than two weeks after the quake.


Finland-based Elcoteq , which assembles cellphones and set-top boxes for many global brands, warned on Tuesday it faced volume and profitability risks in the short and medium term because of the disaster in Japan.

Japan accounted for 14 percent of global production of computers, consumer electronics and communications gear last year, according to IHS iSuppli.

Kwon also warned that an extended disruption could deplete inventories of key components at its customer companies.


He said the memory chip market had bottomed out and would show a gradual recovery from the second quarter.

"The memory chip market has been under a severe correctional phase since the second half of last year but the balance of supply and demand will gradually improve from the second quarter," Kwon told shareholders.

Kwon said that the global economy would also gradually improve but that uncertainties from the Japan's earthquake, the political turmoil in the Middle East and European debt problems may deter the recovery.

Shares in Hynix, which competes with sector leader Samsung Electronics and Japan's Toshiba Corp and Elpida Memory , rose 2.6 per cent by 0230 GMT, beating a 0.7 per cent rise in the broader market