Disaster in Japan could raise semiconductor prices

The recent earthquake and tsunami in Japan could end up generating higher revenues for technology manufacturers this year.

Industry analyst firm IHS iSuppli said that fallout from the disaster looks to be creating a supply drop in the market, which will end up increasing prices and driving up revenue for manufacturers.

In particular, the company predicts that the DRAM market will take advantage of the reduced manufacturing capacity and pad what previously looked to be a 10.6 per cent drop in revenue to a more manageable four per cent decrease in 2011.

IHS memory and DRAM principal analyst Mike Howard predicted that global DRAM shipments over March and April will drop by 1.1 per cent as a result of the earthquake and its aftermath.

"This reduction, along with other factors, contributed to a steadying in contract prices for DRAM in March, which typically is a weak month for sales when prices were expected to decline by as much as three per cent," said Howard.

"The impact of the prices holding steady during this period is dramatic and will represent a major boost for DRAM revenue for the entire year."

Overall, the company predicts that the semiconductor market will draw some $325.2bn over the course of 2011, up from a previous forecast of $320.1bn. Growth on the year has been shifted from 5.8 per cent to an estimate of around seven per cent.

The report comes just days after IHS iSuppli revealed that the semiconductor industry saw its first revenue decline in more than 24 months during the last quarter of 2010.

The projections also come as a major acquisition has shaken up the semiconductor market. On Tuesday word broke of a £4bn all-cash acquisition of National Semiconductor by Texas Instruments.