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Hynix plant explosions leave memory shipments on hold

Lucas Mearian | Sept. 5, 2013
DRAM prices seen rising significantly.

SK Hynix Semiconductor's memory fabrication plants in Wuxi, China were engulfed flames early this morning after a chemical explosion reportedly rocked the facilities.

Several major memory suppliers have stopped shipments until they know the full extent of the damage to the Hynix plants and what effect it will have on the market as a whole, according to reports. Two of the plants, Hynix FABs 1 and 2, were said to be engulfed in flames following the blast.

The fires have been extinguished, the company said in a statement today.

Hynix is the world's second largest producer of memory chips and represents some 30% of worldwide production. It supplies tech giants like Apple with memory for smartphones and tablets.

"If those pictures are real, then this is significant," said Mike Howard, a principal analyst at DRAM & Compute Platforms at IHS iSuppi, referring to online photos.

"The DRAM market is already tight and the Wuxi facility is nearly 15% of global DRAM capacity. If the Wuxi fab is down hard (meaning wafers in process are scrapped) then we expect prices to jump immediately - likely for NAND and DRAM," Howard said.

If the damage forces Hynix keep the FABs offline for any duration, then prices of DRAM and NAND could climb significantly.

"I would not be surprised to see a 10% jump in the spot price to today," Howard said.


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