Some production lines at Toshiba Memory Corp.’s plant in Mie Prefecture, Japan, have not been restored yet after a shutdown on June 15 due to a power failure. Semiconductor industry analysts estimate the damage caused by the blackout at 30,000 to 100,000 wafers, which represent 10 to 25 percent of Toshiba's monthly NAND flash production. However, Toshiba has not disclosed the exact cause of the accident and the size of the damage.
Toshiba Memory Corp. is the world’s No. 2 producer of NAND flash memory chips. It said on June 21 that production at its plant in central Japan has been partially suspended for nearly a week since a brief power outage last Saturday.
The accident took place amid an excessive accumulation of NAND flash inventories. The fixed trade price of a 128 Gb MLC NAND flash, which peaked at US$5.6 in June last year, fell to US$3.93 in May. Nonetheless, inventories continued rising, prompting market experts to even forecast that Samsung Electronics would barely make a profit in the NAND business in the second quarter of this year. Some analysts say that SK Hynix will record losses of nearly 300 billion won in the fourth quarter of this year due to continuing deficits in the NAND field.
If the Toshiba recovery takes time, it will bring Korean chipmakers an opportunity to sell off their inventories. Normally, if a power failure occurs in a semiconductor factory, it takes several days to restart it and stabilize product quality. The causes of power outages determine how long recovery work will take. In general, it will take more time to recover if a failure occurs in electricity supply facilities or transformers. Toshiba was unable to resume production on the fifth day of the accident, which has led industry experts to forecast that it will take more than three months to normalize production at the factory.
In particular, it is noteworthy that chipmakers with the second and fourth largest global NAND flash market shares are producing NAND flashes at the Toshiba factory. Western Digital, the fourth-largest supplier of NAND flashes, established a joint venture with Toshiba to produce NAND flashes at Yokaichi Plant. "If the recovery is delayed, the damage will continue to increase," said Song Myeong-seop, a researcher at Hi Investment & Securities. "This is a positive factor for Korean companies as the NAND flash market has been showing a sign of a recovery lately."
However, some industry observers say that the blackout’s impacts on the semiconductor industry will be marginal as the suspended Y3 and Y4 Lines of the Toshiba plant produce 2D NAND flashes. 2D NAND is mainly used in old products such as folder phones and demand for 2D NAND flashes is not as strong as demand for 3D NAND flashes. "It seems that the suspended lines are 2D NAND flash lines, not those for 3D NAND flashes," said Hwang Min-seong, a researcher at Samsung Securities. “Global 2D NAND flash inventories are so big that the blackout is unlikely to have a big impact on the semiconductor market.”