Nuclear Plant Crisis Drives Price Spikes in High Tech, Energy Industry

Car makers, high-tech companies search for alternates in global supply chain

As if the earthquake and tsunami that hit Japan on Friday weren’t enough, its present nuclear problems and resultant lack of energy panicked financial markets and sent companies all over the world scrambling to find alternate sources of supply for everything from auto manufacturing to shipbuilding to high-tech components.

According to Reuters, spreading radiation from the Fukushima Daiichi power plant in the northeast of Japan has not only threatened Tokyo, but has also resulted in a shutdown of a major source of Japan’s power, crippling its manufacturing and commercial operations. Ports have also been affected, damaged in the quake, and the lack of power has caused problems with other transporation.

The ripple effect is hitting companies downstream from Japan’s factories, as prices for everything from semiconductors and memory chips to automobiles. Even as shares of Tokyo Electric Power Co. (TEPCO), Asia’s biggest utility and the operator of Fukushima, saw its shares plummet on a flood of sell orders (despite almost nonexistent trading, the company lost 42% of its value since Friday), other prices have risen. NAND flash memory chips saw their spot price jump 20% on Monday; DRAM memory chips were up 7%.

Japan produces almost 40% of flash memory chips for such tech devices as computers, smartphones and tablets, and about 20% of the world’s semiconductors.

Tech companies aren’t the only ones affected. Those that trade in nuclear energy are seeing big losses, as Germany and Switzerland have backed off from expansion plans for nuclear power plants and Austria has called for “stress tests” on existing plants throughout the European Union (EU). Taiwan’s state-run Taipower said it was examining ways to cut its reliance on nuclear power and Toshiba Corp., which had planned to export its nuclear power technology, saw its shares drop by an additional 19.5% after it fell 16% on Monday.

Other countries’ nuclear-focused companies weren’t immune. Canada’s Cameco, which is the second largest producer of uranium, was down 13%; Uranium One dropped by 28%; General Electric, a manufacturer of nuclear power plant equipment, fell 2.2%. Shaw Group, an engineering and construction company that is part of a consortium planning to build nuclear plants across the world, saw its shares drop by 9%.

And although President Barack Obama said that the U.S. was still committed to keeping nuclear power, analysts are predicting that a planned nuclear power plant expansion worth $10 billion by NRG Energy Inc. in South Texas may fail to get government loans.

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