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© mchudo dreamstime.com Analysis | December 13, 2013

SK Hynix’s Wuxi Fab to recover fully from fire damage

According to DRAMeXchange, damages from the September 4 fire at SK Hynix’s DRAM fabrication plant in Wuxi, China caused a month-long cease in production, and global DRAM supply decreased by 10% in one single month.
Therefore, commodity DRAM price trend, initially projected to fall in the second half of the year, has risen by nearly 20% since the fire. Average contract price for 4GB DRAM reached a high of US$33 in the second half of November. However, SK Hynix placed top priority on resuming operations at the Wuxi fab, immediately sending in hundreds of experts to begin the recovery process and working round the clock to decontaminate the clean room.

Shortly after the incident, the memory makers replaced some of the fire-damaged equipment with machinery from its M11 fab, and newly purchased equipment has recently been moved into the Wuxi fab. Currently, SK Hynix is on track for a full recovery by mid-January. TrendForce provides the following update with the latest details regarding the recovery of the Wuxi fab:

1. Capacity at the Wuxi fab in October and November was 30K and 70K wafers per month, respectively. A target capacity of 100K is set for December, and the plant is expected to return to fully loaded 130K wafers per month in January 2014.

2. SK Hynix began moving newly purchased equipment into the Wuxi fab in December, and the memory maker has negotiated with vendors to have the new devices installed as quickly as possible. The installation, which normally takes 4 to 6 weeks, is expected to be finished in 3 weeks.

3. Once the Wuxi fab’s capacity returns to 130K wafers per month, production at SK Hynix’s plant in Korea will return to normal levels – DRAM capacity at the M10 fab will go back to 130K wafers per month, M12 capacity will be transferred back to the manufacture of NAND products, and the 50K wafers per month decrease at the M11 fab will be returned to NAND production as well.

4. Worth noting, as SK Hynix did not completely rebuild the Wuxi fab’s clean room despite contamination from the fire and the power outage, whether production yield rates will return to pre-fire levels remains to be seen. SK Hynix’s supply to PC OEMs began showing signs of shortage in November.

5. As TrendForce previously estimated, the recovery will take 3 to 6 months. If capacity is fully restored by mid-January, output from the Wuxi fab will return to normal levels in early March, during the traditional slow season. Thus, DRAM market prices are expected to fall in the end of 1Q14, and TrendForce projects DDR3 4GB price will drop to a low of US$22~24 next year.

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