Japan quake to boost 2011 global chip sales

TOKYO, JAPAN: Global semiconductor sales are likely to grow by 7 percent to $325 billion this year, as last month's earthquake in Japan boosted prices of computer memory chips, research firm IHS iSuppli said on Wednesday.

IHS iSuppli raised its forecast for global chip revenue for 2011 to $325.2 billion. In February it forecast a 5.8 per cent increase to $320.1 billion.

It expected dynamic random access memory (DRAM) chips to be most affected by an unexpected rise in selling prices triggered by supply disruptions following the earthquake. iSuppli forecast sales of DRAM chips to shrink by 4 percent this year versus a previous expectation of a 10.6 per cent reduction.

"The earthquake will result in a 1.1 per cent reduction in global DRAM shipments in March and April," said Mike Howard, principal analyst for DRAM and memory at the firm.

DRAM prices may rise by up to 2 per cent in April

Average contract DRAM prices may rise by up to 2 per cent in April, compared with a previously expected 3 to 4 percent decline, and pricing pressure should ease in the second half of the year, it said.

Japan supplies more than one-third of NAND-type flash memory chips, used in tablets and smartphones, and 14 percent of DRAM. It is also home to the world's largest producer of silicon wafers used to make semiconductor, accounting for about 60 percent of global supply.

Top wafer supplier Shin-Etsu suffered a production loss after the quake and tsunami hit its plants, which account for 20 percent of global wafer output.