Quake Fallout Economic Impact

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Wednesday, March 16, 2011 - 9:27am

Companies with strong ties to Japan are still evaluating what the disaster will mean for them.

While Japan is still coming to grips with a humanitarian crisis of epic proportions, many companies that do business there are still assessing the economic impact.

The catastrophe may have a big impact on supply for many companies.

Major automakers in Japan have closed their plants until at least Wednesday.

Some Toyota dealers are concerned about supplies of its Prius, which is built exclusively in Japan.

Several consumer electronics companies have also suspended production in Japan.

In the case of memory chip manufacturers, the bigger challenges may be getting power and materials to continue to production.

"Toshiba and SanDisk share a NAND flash fab in Japan. There was no structural damage according to the companies, but the rolling blackouts could be a problem with some of the production," warns Stifel Nicolaus semi-conductor analyst Kevin Cassidy.

Japan creates about 40 percent of the world's flash memory used in electronic gadgets and prices for it have spiked as high as 20 percent since Friday's earthquake.

In the short term those price jumps aren't likely to be felt by consumers.

"Increasing prices to protect short term profits will not be the priority for consumer electronic device companies," says Brian Tomlin, associate professor at Dartmouth's Tuck School of Business.

That's because unlike hikes in gas prices, consumers can often simply wait out price jumps for the latest gadget.

Production on items such as LCD televisions and batteries are also among the items that could be impacted by production issues as Japan recovers.
 

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