Power outage at Hynix's fab. Now all eyes on chip prices

DRAM and NAND spot price per gigabyte

(Credit: Jim Handy, Objective Analysis)

A lot of original equipment manufacturers are holding their collective breath right now. Hynix Semiconductor's fab in Wuxi, China, suffered an outage lasting more than 15 hours on Monday and that's inevitably raised questions about the potential impact on DRAM prices. Here's the short story: The company estimates it will take a couple of days to return to full production at the plant, which makes about half of Hynix's total DRAM output. And what about chip prices? Still to be determined, but this market has been awash in inventory for quite awhile.

Oddly enough, prices for NAND and DRAM haven't moved in lockstep following natural disasters. A study by Jim Handy of Objective Analysis found that while NAND prices climbed after a March 2007 earthquake in Japan, they didn't also rise after a July earthquake. In contrast, DRAM prices fell right away after both events even though production was not affected by the earthquake. He also had this take:

"A power loss, no matter how brief, may force the company to scrap some of the wafers that were undergoing a high-temperature process at the time of the outage. Other wafers, for example those going through photographic processes, will simply need to be re-worked by backing up and starting at some prior step of the process. Short power losses tend to cause more minor difficulties than do longer interruptions. A power loss of 20 minutes or longer may require a longer period of downtime to allow furnaces to be brought back to a stable temperature."

This hasn't been the best of times for the DRAM market. For months, the market's been unable to digest a surplus of DRAMs and NAND flash and prices have predictably trended down. But Handy doesn't expect any major impact.

"The market's just too darn oversupplied--still," he told me.