Monday, March 14, 2011

An interruption is coming

The news coming out of last week's devastating earthquake in Japan doesn't seem to be getting any better. As of this writing, engineers and other experts are working to stabilize a nuclear power facility that was seriously damage in the tremors. Nuclear power produces a significant amount (perhaps as much as one-third) of Japan's electricity, and the loss of a major supply point will have important long-term consequences.

Toshiba, in partnership with SanDisk, is the source of roughly 45% of the world's wafers for flash memory. Their primary manufacturing facility, located near Tokyo, saw its assembly line shut down for briefly due to the earthquake. These NAND chips are a critical component in a wide range of devices, including the iPad and smart phones. While production has resumed, its not clear how quickly transportation and other logistical concerns will be resolved. The wafers might end up sitting on shelves waiting for ships or trains to come and pick them up.

Demand for these devices is heating up. Apple has created a lot of buzz around its product line in the past two months by engaging Verizon and with the introduction of the iPad2. Samsung and Motorola have picked up their game with the Xoom and the Galaxy Tab. These are game changers, and we can expect senior sales professionals, junior executives and middle-managers to suddenly "need" them to do their jobs effectively. I expect that over the next 60 days, we'll begin to hear of waiting lists and backorders for these devices ... reports that will grow more common through the summer. If you intend to begin rolling them out to staff in the coming two quarters, plan accordingly.

For more, check out ... Toshiba Chip Production Resumes

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