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Report: Impact of Taiwanese Earthquake on DRAM Output to be Negligible in Q2

Report: Impact of Taiwanese Earthquake on DRAM Output to be Negligible in Q2

After the 7.2-magnitude earthquake that struck Taiwan on April 3, 2024, there was immediate concern about how it might affect chip production within the country. Even for a well-prepared country like Taiwan, the earthquake was the strongest to hit the region in 25 years, making it not unusual. But, according to research compiled by TrendForce, the impact on DRAM production will not be significant. The market tracking company believes that Taiwan's DRAM industry is largely unaffected, mainly due to their strong earthquake preparedness measures.

There are four memory makers in Taiwan: Micron, the only member of the “big three” memory makers on the island, operates two fabs; Meanwhile, among the smaller players are Nanya (which has a fab), WinBond (which makes special memory in a fab), and PSMC (which makes special memory in a plant). The study showed that these DRAM producers immediately resumed full operations, but some wafers had to be thrown away. TrendForce claims that the earthquake is estimated to have a minor impact on Q2 DRAM production, at a negligible 1 percent.

In fact, as Micron ramps up DRAM production on its 1alpha and 1beta nm process technologies, it increases memory bit production, which will positively impact commodity DRAM supply in Q2 2025.

Following the earthquake, quotations in both the contract and spot DRAM markets were temporarily suspended. However, spot market quotations have already largely recovered, while contract prices have not fully recovered. Notably, Micron and Samsung stopped releasing quotes for mobile DRAM shortly after the earthquake, with no updates provided until April 8. In contrast, SK hynix resumed quotations for smartphone customers on the day of the earthquake and proposed more moderate price adjustments for Q2 mobile DRAM.

TrendForce expects seasonal contract price growth between 3% and 8% for Q2 mobile DRAM. This moderate increase is partly due to SK Hynix's more restrictive pricing strategy, which is likely to influence pricing strategies across the industry. According to TrendForce, the earthquake's impact on server DRAM primarily affected Micron's advanced fabrication nodes, which likely led to an increase in final selling prices for Micron's server DRAM. However, the exact direction of future prices remains to be seen.

Meanwhile, DRAM fabs outside of Taiwan have not been directly affected by the earthquake. This includes Micron's HBM production line in Hiroshima, Japan, and Samsung and SK hynix's HBM lines in South Korea, all of which appear to be operating with business as usual.

In general, the DRAM industry has demonstrated resilience to the earthquake, with minimal disruptions and quick recovery. Abundant inventory levels for DDR4 and DDR5, coupled with weak demand, suggest that any modest price increases due to the earthquake will soon return to normal. The only potential outlier here is DDR3, which is nearing the end of its commercial life and production is already declining.

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