LCD Panel Makers, DRAM Producers Could Be Hit By Matsushita Plant Fire

A fire last week at a Matsushita Battery Industrial plant in Osaka, Japan could cause serious problems for laptop makers - and the companies that supply them - in coming months, according to Lehman analyst James Kim.

Kim asserts that the plant produces 14% of the world supply of lithium-ion notebook batteries; and he says the factory will likely be out commission for three months or longer. The effect, he says, will be to take at least 4 million units out of the global supply of notebook batteries in the fourth quarter. Kim says that the company’s largest customers include Toshiba and Dell (DELL). He also notes that there had already been a “serious shortage” of lithium-ion notebook batteries.

With laptop production likely reduced by the lack of battery supply, pricing of other components could be reduced. Kim thinks this will show up first in LCD notebook panels, with some capacity shifted to desktop monitor production. (Although he says that he still anticipates “very tight supply” of panels in 2008.) He also says there are negative implications for the DRAM market, with lower than expected fourth quarter shipments now likely.