A fire at a wafer fab belonging to SK Hynix in Wuxi, China, is likely to push up the price of DRAMs used in personal computers and smartphones in the second half of 2013. After the reports of the fire emerged, the spot market for DRAMs showed jumps of up 20 percent, according to the DRAMexchange website, although this was partly born of uncertainty awaiting information on the extent of the damage.
The fire happened on Sept. 4 during the installation of equipment and burned for about 90 minutes. One person suffered minor injuries, according to reports that cited SK Hynix as their source.
SK Hynix has been reported saying that no equipment was damaged by the fire and that production at the fab, which is responsible for more than 10 percent of the world's supply of DRAMs, would resume soon.
Market analysis firm TrendForce, which focuses on memory component supply through its DRAMexchange website, issued a statement saying that it believes that it could take six months for SK Hynix's damaged cleanroom to be rebuilt and that this will disrupt production. TrendForce said the Wuxi wafer fab produces about 100,000 DRAM wafers per month and 30,000 NAND flash wafers per month, or about half of SK Hynix's total monthly output of 260,000 wafers.
"We expect to resume operations in a short time period so that overall production and supply volume would not be materially affected," an SK Hynix spokesperson was quoted as saying by a Bloomberg report. However, any production halt is expected to have an impact on DRAM pricing.
SK Hynix announced record profits for the second quarter of 2013 driven partly by high prices for specialty and mobile DRAM. The company's revenue was up 41 percent from the first quarter and 49 percent from the second quarter of 2012 to 3.93 trillion won (about US$3.52 billion).
Even before news of the fire broke, the average selling price of DRAMs was expected to rise by 40 percent in 2013. (See: DRAM Prices to Rise 40% in 2013.)