Update: Hynix plant fire leaves memory shipments on hold

DRAM prices seen rising significantly

SK Hynix Semiconductor's memory fabrication plant in Wuxi, China was engulfed flames earlier today after a fire swept through the building.

Several major memory suppliers have may 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. The plant, Hynix FAB C2, was said to be in better condition after the fire than first reported.

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

"At around 16:50 Korean time, a fire occurred during equipment installation but the fire was completely extinguished by 18:20 Korean time," the company said. "We are still investigating the extent of damage, however there was no human casualty with only one minor injury."

The company said that while published photos showed the FAB facility surrounded by smoke and engulfed in flames, "the damage is not as severe as it seems as the smoke was created because the fire was concentrated in the air purification facilities that are linked to the rooftop of the fab."

The company also said in an email reply to Computerworld that there is no material damage to the fab equipment in the clean room, and Hynix expects to resume operations in a short time period, so overall production and supply volume should not be "materially affected."

Hynix expects the majority of the damage will be covered by insurance.

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.

Lucas Mearian covers storage, disaster recovery and business continuity, financial services infrastructure and health care IT for Computerworld. Follow Lucas on Twitter at @lucasmearian, or subscribe to Lucas's RSS feed . His email address is lmearian@computerworld.com.

Copyright © 2013 IDG Communications, Inc.

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