Taiwan earthquake spares DRAM and foundry production

The DRAM industry, primarily located in the northern and central parts of Taiwan, and the foundry industry, spread across the north, central, and southern regions of Taiwan, appear to have sustained minimal initial damage.

The strongest tremors felt in the northern Linkou area ranged from intensity scale 4 to 5, with other regions experiencing around intensity scale 4 tremors. Manufacturers have begun sequential shutdowns for inspections. Despite the ongoing inspections, no significant equipment damages have been reported so far.

TrendForce says that they are currently assessing the damage to production line fragments and furnace tubes. The analysts believe that manufacturers will manage to restore their production capacities by ramping up operations, as there have been no reports of significant disasters. Moreover, in light of the heightened attention on the supply of AI components, it's noted that NVIDIA chips, which utilize the 4nm process manufactured at TSMC's Southern Taiwan Science Park, did not lead to the evacuation of personnel. However, the need for equipment inspections did require some temporary shutdowns. TrendForce predicts that these operations can be quickly resumed with minimal impact on supply.

Micron, with its DRAM production capacity mainly located in Taiwan, has led the suspension of DRAM pricing, with a reassessment of post-disaster losses to restart negotiations for 2Q24 contract prices. Furthermore, Samsung and SK hynix have also halted their pricing, although neither supplier has DRAM production in Taiwan, opting to wait and see the market's direction.

Despite the earthquake, the spot market for DRAM and NAND Flash memory had been showing signs of weak demand for several weeks. Therefore, although Micron and Nanya experienced shutdowns, the ample supply has prevented significant price fluctuations. The overall price increase was minimal, with purchasing enthusiasm remaining low.

TrendForce concludes that while there may be a slight short-term increase in DRAM spot prices, the continuation of this trend is uncertain due to persistent weak demand. It’s further noted that DRAM suppliers and module factories have temporarily ceased pricing activities, reflecting a cautious approach in the aftermath of the earthquake.