Supply Chain More Optimistic About Q2 Component Demand
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In late March, Micron reported that its production facility Micron Memory Taiwan (formerly Rexchip) experienced an interruption of nitrogen gas supply due to the malfunctioning of the gas generation system located outside the facility, according to DRAMeXchange, a division of TrendForce. Although the equipment has been fixed, the facility is not expected to return to full operation until early April. This will likely cause a hiccup in supply and higher price hikes, but it should be temporary and not last through the second quarter.
Micron Memory Taiwan makes PC DRAM, server DRAM, LPDDR4 DRAM, and graphics DRAM – all products currently experiencing tight supply. The plant interruption is expected to last until the first half of April.
The malfunction’s impact on supply should not extend into the second quarter of 2018, Avril Wu, research director of DRAMeXchange told EPSNews. But the graphics DRAM market, which is already facing an undersupply problem, will be hit the hardest by the production hiccup, said Wu.
She expects that the prices of graphics DRAMs, PC DRAM and server DRAM would all go up as the result.
For example, contract prices for PC DRAM, which are now primarily quarterly deals, were forecast to rise by around 5 percent in the first quarter and 3 percent in the second quarter. But the nitrogen supply issue could push up contract prices by more than 3 percent in the second quarter.
“We estimate that the price increase would be higher than our previous forecast of 3 percent,” said Wu. “We believe this price rise would only be temporary and would last for no longer than a quarter.”
This is the second shut down of a Micron fab facility in one year due to a nitrogen gas equipment malfunction. In July 2017, Micron Technology Taiwan’s Fab-2 was shut down due to the malfunction of a nitrogen gas dispensing system that contaminated the wafers and equipment at the facility. It caused a production capacity loss of around 60,000 wafers out of a total of 125,000 wafer starts per month.
The cause of the recent malfunction is “not exactly the same but the malfunctioning equipment is similar to the one that had the problem in July 2017,” said Wu.
She doesn’t have the exact number of production loss of the current shutdown because the plant hasn’t returned to full operation but she expects the production loss of wafers to be at least 40,000 wafers.
“Micron Memory Taiwan (formerly Rexchip) has a wafer production capacity of about 90,000 pieces, which account for around 7.8 percent of wafer capacity in the industry,” said Wu.
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