SK Hynix Inc., one of the top global producers of memory chips (both DRAM and NAND), was forced to suspend operations at its Wuxi, China fabrication facility due to a large fire. Billowing smoke from the fire was visible many miles away.
The fire reportedly started a bit before 4:00 pm local time while equipment was being deployed. The fire was reported to be extinguished by approximately 5:15 pm local time. The company is still trying to ascertain if there were any casualties, the extent of the damage, and is of course investigating the cause of the fire. Some reports have indicated that it was due to some sort of chemical explosion.
The reaction in memory markets was immediate, with prices for DRAM increasing by 10%, and shipments by some manufacturers ceasing within the first hour following news of the fire. Hynix controls some 30% of the world’s memory production in the area, and this could eliminate nearly half of Hynix’s capacity there. This would result in a drop in world DRAM production of some 15%. Other memory manufacturers, such as AMD’s Radeon RAM, could see a nice demand boost, and pricing increase as a direct result of these significant production disruptions.
What could prove a bit unsettling for the SSD market is the effect this fire could have on NAND pricing also. Hynix has lately prioritized NAND flash production over DRAM at this facility. If damage resulting from the fire extends to NAND production areas, this could drive NAND prices up quickly also.
Stay tuned for further developments…………………..