SK Hynix: China plant fire won't affect chip production

A fire at its plant in Wuxi, China, has "no material damage" to fab equipment and will not impact supply volume, says the South Korean chipmaker and world's second-largest maker of memory chips.
Written by Eileen Yu, Senior Contributing Editor

A fire at SK Hynix's plant in China has no major impact on its overall production and is expected to be up and running shortly.


"Currently, there is no material damage to the fab equipment in the clean room, thus we expect to resume operations in a short time period so overall production and supply volume would not be materially affected," SK Hynix spokesperson Seongae Park said in a Reuters report Wednesday. Insurance will cover most of the damage caused by the fire yesterday afternoon which resulted in one minor injury, it said.

The blaze temporarily shut down operations at the plant located in Wuxi, in southern Jiangsu province, and several reports surfaced online with images of the burning facility. 

Referring to these, Park said the damage was not as serious as the photos seemed to indicate. "While there are some pictures of the fab surrounded by large dark smoke being circulated, please be informed the damage is not as severe as it seems," Park said. "The smoke was created because the fire was concentrated in air-purification facilities linked to the rooftop of the fab."

In a note sent out Thursday, TrendForce said the fire could impact SK Hynix's production procedures "considerably" in the near future, particularly since the Wuxi plant manufactures almost 50 percent of the company's monthly output of 260,000 wafers and contributes over 10 percent of the world's DRAM wafer production. It added that the facility is responsible for producing 100,000 of its PC DRAM and 30,000 mobile DRAM. 

"The potential damages imparted on the supply end should not be underestimated," the research firm said. Should SK Hynix's main production line be stalled, the shipment of almost 11 million laptops and 10 million smartphone units will be affected within the span of a month, Trendforce said. This would push up the price of PC DRAM and mobile DRAM through to fourth quarter 2013. 

"A considerable shortage in PC DRAM supply can be expected should SK Hynix's clean room take considerable time to recover. This shortage is projected to give rise to a further price increase as well as restrict the growth in the content per box for PCs," the market researcher said, adding impact from the fire on spot prices will be more apparent when further details of the damage are provided.

SK Hynix said it was still investigating the cause of the fire. The South Korean chipmaker is the world's second-largest DRAM maker and supplies to global smartphone makers such as Apple and Asus.

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