Look for another leap in the spot price of memory chips and a few more thousand people deciding that they’ll wait a few months before trying out Windows NT: according to Reuter, Sumitomo Chemical Co Ltd says it is having trouble finding a new source of supply of the epoxy resin used in the chip encapsulation process following the explosion and fire last month at its factory in western Japan, which cut off 60% of the world’s production of the epoxy resin, which Sumitomo reckons is used in about 80% of all chips. Most companies have one or two months supply of the resin, as does Sumitomo Chemical itself. But it says it does not yet know when it can resume production – it had been put at at least six months – and that there will be a problem when the stocks run out. After October we should get to the bottom of our stocks, Hitachi Ltd said. Sumitomo has already arranged to procure over half its usual output from other Japanese producers but has still not found any further sources. It has asked Dow Chemical Co, which used to make the resin but closed its plant in 1991, to restart production, but Dow says it is reluctant to do this – it stopped production because it was unprofitable and says resuming would cost between $3m and $5m, and that it will start up again only if Sumitomo agrees to buy five years’ output, something Sumitomo is not keen to do. The resin is a standard compound, so producers could not differentiate their epoxies, and a price war in the late 1980s left Sumitomo Chemical as the only major survivor – and for the sake of economies of scale it took the risk of concentrating its production in one factory.
