SK Hynix shifting more production to DRAM after price jump

A fire at SK Hynix's factory in China has affected memory chip production there

SK Hynix will increase DRAM production at its headquarters, the company said Friday, following a price spike in memory chips after a fire at a company factory in China.

The South Korean memory chip supplier is shifting the production to Icheon, South Korea, "in order to minimize disruptions" in its DRAM supply, it said in an email. Last week, a fire broke out at the company's DRAM factory in Wuxi, China, sparking worries it would create a major shortage in DRAM chips, which are used in PCs, smartphones, and tablets.

Since the fire, prices for DRAM chips have gone up 27 percent, according to DRAMeXchange, which tracks the market. The Wuxi facility contributes 10 percent of the world's DRAM production.

The factory partially resumed operations on Sept. 7, when one of its fabrication lines not affected by the fire restarted production. The company said Friday Chinese safety authorities were still inspecting the facility's remaining fabrication line.

The company plans to bring the factory fully back online in October, SK Hynix added. "Further, we will make every effort to ramp up operations in stages in order to fully recover normalized production level in November," it said.

The rise in DRAM prices is causing some concern that it could limit the amount of memory installed in new PCs, said Dan Nystedt, head of research for TriOrient Investments in Taiwan.

"With Windows 8.1 on the way, many expect PC sales to increase and that's probably why SK Hynix is shifting some production to DRAM to catch the rising prices and meet market demand," he said in an email.

By shifting more DRAM production to its headquarters, SK Hynix said this would lead to "some temporary decrease" in its NAND flash output. Prices for NAND flash, however, are holding steady on strong inventories, Nystedt said.

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