One teeensy little 13-minute power cut, and WD you look at the size of that chip supply cut!

Western Digital 'fesses up to taking 6 exabyte hit, Toshiba still mum

A power failure in Yokkaichi, Japan, has thrown Toshiba and Western Digital’s flash supply into chaos – and will have a significant knock-on effect on global supplies, say analysts.

The temporary loss of manufacturing capacity will reduce global flash supplies around 24 per cent between August and October this year, we're told, and this, in turn, may fuel short-term price rises of 5 to 10 per cent.

On June 15, a 13-minute outage hit the Yokkaichi region, where Toshiba Memory Corporation (TMC), WD's joint venture partner, produces flash chips. The blackout affected process machinery, which are still not working properly, at the pair's factory in the region. Full production will resume by mid-July, according to a Reuters report.

WDC said in a statement on Thursday it expected the incident would result in a reduction of Western Digital’s flash wafer availability of "approximately 6 exabytes," the majority of which is expected to be contained within the first quarter of fiscal year 2020. For Western Dig, that is the July-September calendar quarter of this year.

Flash... na-uh

Aaron Rakers, a senior analyst at Wells Fargo, informed his clients that flash wafer production time is more than 10 weeks. That is why so much flash chip capacity, approximately 6EB, has been lost.

Rakers estimates WD shipped about 11EB of NAND capacity in 2019's February-April quarter (WDC's Q3 fy2019), with 12.3EB shipping in the 2019 May-July quarter.

Wells Fargo's industry watchers suggest "WD had communicated indications of price increases following the Yokkaichi outage – we think a +5-10 per cent price impact could be considered.”

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Toshiba was hit even harder, according to analysts – although it has, notably, not disclosed any numbers regarding the impact on its production output. Rakers has estimated there is a 40/60 production split at the flash factory between WDC and Toshiba. If this is correct, this means Toshiba will lose ~9EB through the power cut.

Storage analysts at Trendforce division DRAMexchange note the pair could lose the confidence of "downstream clients" – which won't gladden the heart of WD, which already has its exposure to Huawei – a major buyer of memory chips and storage kit - to think about.

While its fellow American storage pusher Micron has found some of its products aren't affected by the American export ban, due to come into force in August if the flossy haired prez doesn't change his mind, WD has said it will seek those export licences (allowing it to ship kit to Huawei) that the Trump administration has vowed will be so difficult to get. Lucky old Toshiba has no such worries, of course.

In response to the Yokkaichi power failure, Trendforce has adjusted NAND price trends for the third 2019 quarter, saying the supply of 2D NAND, "will tighten up noticeably".

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As Micron is cutting its flash chip production, reducing wafer starts by 10 per cent, overall NAND industry bit supply will fall in the quarter, with a likely halt to the industry price reduction trend.

No doubt fab plant minds will be thinking about power failure contingency measures. ®

Updated to add at 1000 UTC on 1 July

Toshiba told The Reg: "We are currently recovering production in the affected areas of the factory and expect that the vast majority of production equipment will be operational by mid-July. Every effort is being made to minimize the impact to our customers."

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