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Computer Memory Chip Prices Double, Japanese Plant Fire Cited

July 21, 1993

NEW YORK (AP) _ Prices of computer memory chips have doubled in the past week amid fears that world supplies may soon dwindle because of a fire at a Japanese factory that makes an important ingredient.

Some of the biggest U.S. semiconductor and personal computer makers said Tuesday they have big inventories and are not yet worried. But small companies reported the fastest rise in prices they have ever seen.

For instance, a module of three chips that represent 1 megabyte of memory cost dealers about $33 early last week. On Tuesday, the price ranged from $65 to $72 at five distributors contacted by The Associated Press.

A megabyte is 1,000 bytes of storage capacity. Most new PCs are made with at least 4 megabytes of memory. That means the price increase so far could add at least $120 to the cost of making a personal computer.

No one is sure whether the increase will last long enough to affect large PC makers like IBM and Apple.

An explosion and fire leveled the Sumitomo Chemical Co. plant in Niihama, Japan, on July 4. The plant was the world’s largest producer of high-grade epoxy resin, an ingredient in the plastic casing of many chips.

News accounts have variously put Sumitomo’s market share at 40 percent to 60 percent.

″I think it caught everybody by surprise to realize that one plant was this important to total supply,″ said Jonathan Seybold, a computer industry analyst in Los Angeles.

Sumitomo has said only that it will take ″some time″ to rebuild. It said it has a two-month inventory of resin, may convert some of its other plants to resin production and last week made an agreement with the No. 2 resin maker, Nippon Kayaku Co., to fill some of the void.

Dow Chemical Co. was the largest U.S. manufacturer of the resin but stopped making it last year.

The largest maker of semiconductors, Intel Corp., relies on a ceramic, rather than plastic, casing for most of its chips.

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