Factory fire pushes up price of memory chips
(Guardian (UK) Via Acquire Media NewsEdge) The price of memory chips for mobile phones and computers has soared by 19%, to a three-year high, following a fire at a factory in China belonging to Apple supplier SK Hynix.
The world's second-largest chip maker, Hynix supplies a third of the dynamic random access memory (Dram) chips sold globally. The company has halted production at its factory in Wuxi near Shanghai after the blaze tore through the foundry for 90 minutes.
The impact on prices at DRAMeXchange, the largest Asian components market, highlights how device makers face rising costs. Booming phone sales mean demand for specialist materials is so high it can quickly outstrip supply.
The cost of the benchmarck DDR3 2-gigabit chip jumped by 30 cents to $1.90 (pounds 1.22) on Thursday, the biggest rise since September 2010, Bloomberg reported.
Hynix is said to supply Apple, Samsung, Lenovo, Dell and Sony, which use its components in a range of devices from phones to tablets and laptops.
The fire on Wednesday, during installation of equipment at Wuxi, damaged the clean room, which one industry expert said could take six months to rebuild.
"We are still investigating the extent of damage," Hynix said. "Currently, there is no material damage to the 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."
The clean room is the heart of the foundry, where chip wafers are produced in an environment controlled to eliminate dust and dampen vibration. Temperature and humidity are also monitored in order to minimise static.
"It will take at least half a year before SK Hynix's damaged clean room is fully rebuilt," market research firm TrendForce said in a report. "Such an event is likely to cause the price uptrend of PC Dram and mobile Dram to continue throughout" the fourth quarter.
Hynix, which has its headquarters in South Korea, saw its shares fall nearly 4% in Seoul yesterday. Samsung, which is the largest supplier of these components with a near 33% share, according to TrendForce, saw a slight lift in its share price.
If the Wuxi factory's production is halted for more than a week, substantial shortages could lead to higher prices, benefiting all memory-chip manufacturers, analysts at Sanford C Bernstein said in a report.
(c) 2013 Guardian Newspapers Limited.
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