SK Hynix Factory Shutdown
The suspension of operations of SK Hynix's DRAM factory in Wuxi, China sent the price of the DRAM spot market in Asia skyrocketing.
According to DRAM eXchange, a division of global market research firm Trend Force, on September 5 the price of 2Gb DDR3 1600MHz in the DRAM spot market was US$1.889, up 18.96% compared to US$1.59 from the previous day. 2Gb DDR3 1333MHz products were traded at US$1.895, up 18.44% compared with the previous day's closing price. The price of 4Gb DDR3 1600MHz products also increased 11.38% to reach US$3.475.
It is very rare that the price of the DRAM spot market jumps 20% in a day.
This sharp upward trend is mainly attributable to the shutdown of SK Hynix’s DRAM factory in China caused by a massive fire, since the company's DRAM chips account for 30% of the global market, which makes the Korean company the second largest manufacturer in the world.
The C2 Production Line in Wuxi, which mostly manufactures DRAM chips for PCs, makes up approximately 50% of the company's total production, which is 15% of global DRAM output.
An industry source said, "The DRAM price in the spot market shot up nearly 20% owing to the shutdown of all production lines at SK Hynix’s Wuxi facility. This incident was caused by a sudden increase in demand, rather than just a dwindling supply of products. People wanted to take back or purchase goods in advance. So, there was a big rise in demand."
Since some speculators were involved in advanced purchasing in the event of a prolonged halt in production, at some point the price of 2Gb DDR3 1600MHz surged 19.33% to reach US$1.895.