“Prices for memory chips used in smartphones and personal computers surged 19 percent, the most in three years, as SK Hynix Inc. suspended operations in China after a factory fire,” Jungah Lee reports for Bloomberg. “Shares of the Apple Inc. supplier fell.”
“The blaze occurred Sept. 4 during the installation of equipment at a factory in Wuxi, China, manufacturing dynamic random-access memory chips for SK Hynix, the world’s second-largest maker,” Lee reports. “The fire burned for about 90 minutes, the Icheon, South Korea-based company said. One person suffered minor injuries.”
Lee reports, “The price of benchmark DDR3 2-gigabit DRAM jumped 30 cents, the biggest increase since September 2010, to $1.90 yesterday, according to DRAMeXchange, Asia’s largest market for the components. The surge underscores growing concerns that makers of mobile devices and PCs will suffer rising component costs due to potential supply shortages, since SK Hynix makes almost one-third of the world’s DRAM chips. ‘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 yesterday. ‘Such an event is likely to cause the price uptrend of PC DRAM and mobile DRAM to continue throughout’ the fourth quarter. ‘We are still investigating the extent of damage,’ SK Hynix said in an e-mailed statement Sept. 4. ‘Currently, there is no material damage to the fab 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.'”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Now, Now…” for the heads up.]
So, it will take six months to get their clean room fabs that suffered no material damage rebuilt, and production volumes will not be materially affected, so DRAM prices are going up. Got it.
Hard drive prices spiked after Thai floods damaged a key factory. Despite it being fixed and returned to pre-flood capacity, HDD prices did not come down from their spike as quickly as it should have.
You can bet this will happen with DRAM prices too.
No more than 6 weeks.
Good thing that Apple locks there dram prices in massive purchase contracts years ahead. So the price of the iPhone, iPad, iPods and all of there macs will be unaffected.
Actually some contracts allow for “acts of got” type events to change contracts. Floods, earthquake, ……. fire…wink nod….
Just saying..
Hynix hijinks. “How many times do I have to tell you guys not to photocopy your butts on the DRAM manufacturing floor!”
If Apple has kept up their normal practice of preordering and prepaying to lock in supply and price the price of Apple products should not be affected.
As far as I recall, Apple has never raised prices following such events.
They won’t because of the afore mentioned massive pre purchase contracts that locks there prices for years.
Corporate espionage. 😎
Nah, it’s the obligatory article about constrained shipping of the new Apple iPhones.
Thanks for your informative post…..
Worst case scenario, deliberate in order to push Apple incs share price down (having sold a chunk of shares) before the unveil on the 10th so that the share price drops even further before buying back at the bottom and then watch the price rise inexorably after Apple’s customers give another resounding endorsement of the new products. BASTARDS!!! (Only if that is the case).
Doesn’t make any sense at all…
How the heck can there be a supply shortage when the price can rise 19% in one day because of a fire…. It seems to me that there is so much capacity that the prices are suppressed because of over capacity and shoots up at any opertunity. Shortage of memory would generate a higher price and prices are low. This price rise is just speculation and has nothing to do with reality.