Japan earthquake may push up price of electronic goods

The price of consumer electronic goods such as computers, mobile phones and DVDs could rise across the world due to shortage of electronic components from disaster-hit Japan, experts warn.

There are already signs of an increase in the price of memory chips and display panels for computers and game consoles due to problems at Japanese factories.

“While there are few reports of actual damage at electronic production facilities, impacts on the transportation and power infrastructure will result in disruption of supply, resulting in rising prices. Components impacted will include NAND flash memory, DRAM, microcontrollers … and LCDs,” said analysts in a report for market research firm IHS iSuppli.

The 9.0 magnitude earthquake is the worst since records began to be kept in Japan

The warnings came as the Bank of Japan pumped huge amounts of new money into the financial system to boost confidence, leading to a near 6% rise in the stock market’s Nikkei index of top shares. But the uncertainty still hit markets elsewhere, with the FTSE 100 down 97 points to close at 5598.

A growing group of electronics, steel and car manufacturers inside Japan have suspended operations, creating the prospect of shortages of their products in Britain, Europe and further afield.

Japanese electronics are in particular demand for televisions and audio equipment, but also as components in solar panels, computers and even vehicles. Japan is the world’s biggest supplier of silicon used to make semiconductor chips.

NEC, Panasonic and Fujitsu are among the companies that have halted production and have reported damage to some of their factories. Sony has suspended production at seven plants and analysts say this will have an impact on lithium ion batteries and DVDs.

Texas Instruments, the US chipmaker, said there had been substantial problems caused by the tremors at its manufacturing sites in Japan – including the Miho and Aizuwakamatsu plants north of Tokyo.

Chipmaking is particularly vulnerable to damage by earthquakes because it is generally very sensitive to vibration, dust and interruption in power levels.

Toyota, the world’s biggest carmaker, has extended its Japanese factory closures until at least 22 March and has been unwilling to set a date on when they will reopen. The company has also halted overtime working at its Burnaston factory near Derby, home to a range of cars such as the Auris and an exporter of vehicles to Europe.

Honda, Japan’s second-biggest carmaker, has shut down until at least Monday, while Nissan said it would restart some of its production lines on Thursday and operate until supplies ran out. The British arm of the business said it was operating normally, although there are wider concerns in the industry about supply shortages.

The Japanese car makers have specialised in “just-in-time” manufacturing under which supplies are kept to a minimum. Toyota said it could run Burnaston for at least six weeks without new deliveries of parts.

Japanese exporters are battling a series of obstacles including power shortages and damage to transport infrastructure. At least six international ports in the north of the country have been badly damaged, although the large container ports south of Tokyo are working relatively normally.

Japan’s benchmark Nikkei 225 stock average closed up 5.7% at 9,093.72 as investors snapped up bargains after panic selling sent the index plunging nearly 11% the day before.

Another huge monetary injection from the Bank of Japan to a total of almost $700bn (£606bn) in short-term loans and an indication from the government that it could buy into the stock market also helped shore up the Nikkei. On Tuesday, the index closed at its lowest level in two years after shedding 16% over two days, its biggest two-day retreat in 40 years.

Toyota saw its shares rise over 9%, Sony almost the same amount while heavy industry shares such as Kobe Steel soared 15% and Nishimatsu Construction 6% on thoughts of reconstruction.

*Terry Macalister (guardian.co.uk)

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