All quiet on the Eastern Front... too quiet, actually.
A month ago, we started the conversation about what might happen to the electronics supply chain if North Korea went sideways on the world. At the time, the north was saber rattling in the worst way. (See: Time to Think About Korean Contingencies and Infographic: North Korea's Road to War.)
Since then, the rhetoric has dialed back a bit, but the tensions remain. IHS iSuppli helps put things into perspective. Here's one data point:
- In 2012, 66 percent of industry revenue for the dynamic random access memory (DRAM) market, as well as 48 percent of total NAND flash revenue, belonged to the two South Korean memory titans Samsung and SK Hynix.
IHS iSuppli senior principal analyst for DRAM & memory Mike Howard points out that a disruption hitting those two vendors would likely force flash-memory downgrades in mobile designs, but the impact from DRAM losses would be even tougher to resolve quickly.
"A server with only half its intended DRAM is essentially half a server -- and a smartphone cannot have its DRAM quantity changed, as it needs the original amount for which it was designed," Howard noted.
Risk on display
We Laugh Now...
...But if North Korean dictator Kim Jong Un ignites a war with South Korea,
the memory and display supply chains will be severely disrupted.
It's not just DRAMs and flash memory that are at risk, according to Howard. LG and Samsung own half the world's market share in large LCD panels. More troublesome for the mobile industry, nearly three in four tablet displays rolls off South Korean lines.
Howard notes inventory and production capacity are high, which means a near-term disruption will have minimal impact on the display supply chain, but "a long-term stoppage or reduction of production would have a major effect and dramatically reduce global tablet supply."
Once more into the fray
In DRAM, iSuppli points out that Korea holds, worldwide, eight percentage points more market share today than it did in 2010. NAND flash has remained steady, in terms of global market share (about 50 percent).
So, here we go again. Another day, another issue reveals a major stress crack in the global electronics supply chain superstructure.
When are we going to learn?