According to DRAMeXchange, a research division of TrendForce, the highest price for the mainstream 4GB modules has reached $US 34 due to the supply shortages resulting from SK Hynix’s fire accident and the continuous contract price uptrend. The price represents an estimated 6.25% increase compared to the amount observed in September. Calculating on the basis of the aforementioned figure, the 4Gb chip price translates to approximately $US 3.94, which is close to the $US 4 mark, and only 8% lower than the highest 4Gb chip price in the spot market ($US 4.25). By the time the contract prices are announced in 2H’October, it is expected that the difference between the contract price and spot price will grow smaller.
The overall impact that SK Hynix’s Wuxi plant fire has on first tier PC-OEMs do not appear to be overly significant. In part, this is because the Korean company generally prioritizes providing the majority of its supplies to these OEMs. The second and third tier PC OEMs, on the other hand, are gradually feeling the impacts of the supply shortages. With such a trend continuing, the spot prices are unlikely to drop anytime soon. Even though SK Hynix is currently intensifying its efforts to recover lost production and is looking to resume wafer start in November, the main production supplies intended for the market will not be ready until either December or the beginning of 2014. The Q4 pricing movements, for the most part, are still expected to be influenced by the supply shortages in October and November.
Samsung Seeking to Reclaim PC DRAM Market following SK Hynix’s Fire Accident
The fire incident at SK Hynix’s Wuxi plant has caused the production of nearly 130K wafers to be halted on a monthly basis, which in turn led to a 40% increase in spot prices and the monthly growth in the contract pricing market. The contract prices have already managed reach close to the $US 35 mark as of 1H’October. Under the aforementioned developments, two Korean manufacturers are taking action to protect their status within the PC DRAM market.
Samsung has begun to make necessary adjustments to enhance its PC DRAM market share by increasing the PC DRAM production in its Line 12 and Line 16 plants. In attempting to compensate for lost production following the fire accident, SK Hynix increased the utilization rate in both its M10 and M12 plants, and has made an effort to allocate parts of its NAND Flash capacity to DRAM. According to TrendForce’s estimates, the combined total of the two aforementioned companies’ added production is between 100K-120K per month, which is about equivalent to the original capacity at the Wuxi plant. By the end of Q4, both Samsung’s and SK Hynix’s added wafer output levels are likely to reach a maximum, with the main production set to begin in 1Q14 and expected to make up for the losses from the fire.
With regard to the new Micron group, given that its production is relatively unaffected by the fire accident, its Singapore Tech plant will continue to allocate DRAM capacity to NAND Flash, whereas its Hiroshima plant will ramp up the production of mobile DRAM in order to satisfy the demands of its major clients. While the level of DRAM production has increased in Micron’s Taiwan group (Rexchip), this strategy has reportedly been implemented before the fire accident, and no changes have apparently been made. TrendForce believes that even if the relevant DRAM production is increased, the impact will only be noticeable during the end of Q4 and the beginning of 2014. In the near term, neither the production shortage situation nor the price uptrend is expected to change anytime soon.