Chinese DRAM Plant Fire Continues To Drive Up Memory Prices

Nerval's Lobster writes "Damage from an explosion and fire in SK Hynix's Wuxi, China DRAM fabrication plant will drive up global memory prices for PCs, servers, and other devices, according to new reports. Most of the damage from the Sept. 4 fire was to the air-purification systems and roof of the plant, according to announcements from parent company SK Hynix, which predicted the fab would be back to full production in less than a month. The Wuxi plant makes approximately 10 percent of the world's supply of DRAM chips; its primary customers include Apple, Samsung, Lenovo, Dell and Sony. SK Hynix is the world's second-largest manufacturer of memory chips, with a market share of 30 percent, lagging behind Samsung Electronics with 32.7 percent. In an update published Friday, market-research firm DRAMeXchange reported that damage from the fire, smoke and power outages left at least half the plant inoperable or at reduced capacity. The plant is designed to isolate damage in case of disaster so that at least one of its two parallel production facilities can remain online. The facility itself restarted production Sept. 7, according to a statement from the company."

Comments

How oddly reminiscent

[ddegirmenci]

of the flood that hit a couple years ago, halting 70(?) percent of HDD production...

Re:How oddly reminiscent

[Anonymous Coward]

Oddly reminiscent in the sense that has absolutely nothing in common with it. It's neither HDDs, nor in Thailand nor a natural disaster.

So, it's kinda like going to Madrid to the Reina Sofia museum, looking at Picasso's Guernica and declaring "Hmm, definitely needs more horsepower". In other words, makes no sense at all.

Re:How oddly reminiscent

[ddegirmenci]

I was actually referring to how stories of artificial price inflation began showing up some months after the said incident.

But I'll go by your logic now. It's electronics (and PC components), it's in the SE Asia region, it's an unforeseen incident causing a price hike. I see a 100% correlation here.

This is why terrorists are stupid.

[tlambert]

This is why terrorists are stupid. Damage an air conditioner, unprotected from a parachutist, on the outside of a DRAM plant = billions of dollars of economic damage.

Price Increase? BULLSHIT!

[mrpacmanjel]

So let me get this straight:

A single manufacturer (2nd-largest market share though) suffers reduced production of chips (silicon not deep-fried - sort of!)
Manufacturing plant will be operational within a month
There are other manufacturers that make the same thing
Another manufacturer has largest market share
10% world-wide "shortage" is result

Global prices have to increase?....Sorry, I smell bullshit.

Re:Price Increase? BULLSHIT!

[Xtifr]

It's worse than that. If this plant produced 10% of the world's supply, and its output was cut in half, that means we've only lost 5% of our normal production.

Scare tactics

[jklovanc]

It is strange how a 5% (a plant producing 10% working at half capacity) reduction in capacity can result in large price changes. This is where I have issue with supply/demand pricing. If one can convince buyers something is scarce the price goes up even when the scarcity is not real.

Re:Just in time...

[DarkOx]

How much do you think prices should go up and based on what. A 5% decline in production does not correlate with a 5% price hike.

DRAM gets faster and denser all the time you don't produce in much excess over the expected demand. So when 5% of the production goes away 5% of the orders go unfilled, if those customers want to keep building their phones, pcs, etc; they have to compete on price to not be the ones that don't get their memory delivered on time. Margins on all those end products get squeezed and used to chase DRAM, and that is what you fight at the retail level.

So yes yea capitalism for directing the memory to its most profitable use; if you want to criticize capitalism for something you might want to look at why the supply chain is so remote, thin and vulnerable.