Major fire at factory sends price of memory chips soaring

A massive fire at the factory belonging to SK Hynix, a major supplier to Apple, Samsung, Lenovo, Dell and Sony, has seen the price of memory chips for both computers and mobile phones soar to a three year high on the DRAMeXchange, the largest Asian market for components. The fire which swept through the factory in Wuxi near Shanghai saw the company halt production. SK Hynix is the world”s second-largest chip maker after Samsung, and currently supplies a third of the dynamic random access memory (DRAM) chips sold globally.

The impact on prices has highlighted how device makers face rising costs. Booming smartphone sales mean demand for specialist materials is so high that it can quickly outstrip supply.The cost of the benchmarck DDR3 2-gigabit chip has jumped by 30 cents to $1.90, the biggest increase since September 2010, according to market reports from Bloomberg.

The fire, which occurred a few days ago, came during the installation of new equipment at the facility in Wuxi damaging the clean room which, according to one expert, could take half a year to fully rebuild.

“We are still investigating the extent of damage,” SK Hynix stated. “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 that overall production and supply volume would not be materially affected.”

Hynix, which is headquartered in South Korea accounts for around 30% of the global DRAM market. According to analysts if the Wuxi factory”s production is halted for more than a week, substantial shortages could lead to higher prices.

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