DRAM prices could rise with Hynix's China production facilities burning down

Memory prices might start getting higher. According to reports, Dynamic Random Access Memory (DRAM) production facilities...

Memory prices might start getting higher. According to reports, Dynamic Random Access Memory (DRAM) production facilities owned by SK Hynix Semicondoctor (who you may recognise as one of the biggest DRAM makers in the world with a 30 percent market share) in Wuxi, China, have been destroyed in a massive chemical explosion.

The fires started at around 7:50 AM GMT during what was supposedly a routine install of equipment. It spread quite quickly to other production facilities in the area. The fire itself was contained within two hours, but there has been a considerable amount of damage done to both of the facilities.

DRAM prices could rise with Hynix's China production facilities burning down

The production facilities at Hynix have been damaged to quite an extent (image credit: TweakTown)

 

The ramification of the fire is the almost-irreversible damage that has been done to these facilities. Making chips and silicon that are so small that they have to be measured at the nanometre scale is quite a precise science and needs a clean environment. The fire, and by extension the smoke, will have caused a lot of damage to the facilities.

30 percent is quite a large marketshare; a third of the world's total. With this much DRAM production suspended, the cost of any electronic device that uses DRAM is going to shoot up. Not only will it hinder the production of smartphones, it will also have an effect on the manufacturing of GPUs, since the GDDR5 memory used by both AMD and Nvidia in their GPUs use DRAM.

Seeking Alpha analyst Ashraf Eassa told TweaKTown that the DRAM prices will rise significantly in the coming months. "This development is very clearly going to drive DRAM prices up, and with the other major players already running at very high utilization, this could be a condition that persists for quite some time until additional capacity can be brought online. This clearly favors Samsung and Micron, the two largest suppliers of DRAM."

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