A fire at the Wuxi, China, plant where chipmaker SK Hynix produces DRAM wafers is beginning to send ripples through the supply chain. In the wake of the September 4 incident, suppliers and analysts waited for word on the extent of the damage and how soon the plant would re-open, and some companies took action to protect their inventory.
As of September 5, the world’s second largest maker of dynamic random access memory (DRAM) chips said it expected to re-open the plant shortly, adding that there was one injury and “no material damage” to its fabrication equipment, according to a Reuters report. The Wuxi plant produces roughly 40% to 50% of SK Hynix’s DRAM output.
In response to the incident, independent distributor America II Electronics announced September 5 that it had placed all of its memory inventory on allocation in an effort to “protect its current customer base by preventing others from exhausting America II’s memory inventory,” the company said in a statement.
“Over the past several months, we’ve seen a significant increase in our OEM base,” Brian Ellison, president of America II Electronics, said in a statement announcing the inventory allocation. “We’re committed to each and every one of those customers, and will stay focused on delivering the best solutions and services. To do that, we needed to take a preemptive approach to our inventory position. The supply chain has been disrupted … we felt the need to protect those customers by placing all DRAM and NAND flash inventory on allocation.”
SK Hynix is second to chipmaker Samsung in DRAM production, with Samsung taking 33% of branded DRAM market share in the second quarter of 2013 compared to SK Hynix’s 30%, according to industry tracker DRAMeXchange. Third-ranked Micron Technology accounted for 28% of the market in the second quarter.
Shares in Micron Technology and SanDisk, another rival, were up following the incident, as analysts predicted that a prolonged production shutdown at the SK Hynix plant could further tighten the global supply of DRAM chips.