Feeds

DON'T PANIC says Hynix, China fab explosion is no big deal

Fears of memory price spike misplaced says company

The essential guide to IT transformation

Pics Fears that an explosive fire at SK Hynix's Chinese fabs in Wuxi will cause a spike in chip prices are unfounded, says the company.

"Currently, there is no material damage to the fab equipment in the clean room, thus we expect to resume operations in a short time period so that overall production and supply volume would not be materially affected," company representative Seongae Park told Reuters. "In addition, we expect that the majority of damage will be covered through insurance."

According to local media, a chemical explosion ignited a fire in fabs one and two at the Hynix plant in Wuxi during a refit. Hynix has been repurposing the fabs for NAND production instead of DRAM, and reports say the explosion occurred when new equipment was being installed.

Despite some apocalyptic photos from people on the scene, Hynix says the fire was put out in just over two hours and only one person was injured. No date has been given for when production will restart, but analysts are still predicting a spike in prices.

"While the estimated start up of this China fab is unknown, we estimate it could contribute 15-20% of the worldwide DRAM capacity," wrote Piper Jaffray analyst Jagadish Iyer. "We expect this incident to have a favorable near-term impact on DRAM pricing which has been down anywhere from 5-15% for this quarter (ytd is up > 70%)."

That "favorable near-term impact" means higher prices for OEMs and consumers, and there were reports that other chip manufacturers such as Hynix rival Micron were shutting down sales until a full damage assessment was made public. Micron told El Reg the reports were incorrect.

The incident brought back memories of the 1995 fire at the Sumitomo Chemical Company's Japanese plant, which destroyed half the world's supply of the resin used in memory chip manufacture. RAM prices went through the roof until new facilities could be brought online and OEMs that hadn't buffered supply chains were hit hard.

More recently, torrential rains and flooding in Thailand knocked out Western Digital's hard disk drive plant near Bangkok, causing hard disk prices to double in two weeks, and then rise still further. This was good news for the competition but bad news for buyers.

While Micron's stock price is up over 6 per cent on news of the fire, it doesn’t seem as though OEMs have much to worry about this time. Hynix may be the second biggest memory chip firm in the business, but it seems that there's enough slack in the market to cope – based on Hynix's report, at least. ®

Boost IT visibility and business value

More from The Register

next story
So, Apple won't sell cheap kit? Prepare the iOS garden wall WRECKING BALL
It can throw the low cost race if it looks to the cloud
Apple's iWatch? They cannae do it ... they don't have the POWER
Analyst predicts fanbois will have to wait until next year
AMD unveils 'single purpose' graphics card for PC gamers and NO ONE else
Chip maker claims the Radeon R9 285 is 'best in its class'
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Apple to build WORLD'S BIGGEST iStore in Dubai
It's not the size of your shiny-shiny...
Just in case? Unverified 'supersize me' iPhone 6 pics in sneak leak peek
Is bigger necessarily better for the fruity firm's flagship phone?
Steve Jobs had BETTER BALLS than Atari, says Apple mouse designer
Xerox? Pff, not even in the same league as His Jobsiness
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?