Plant Fire Means Big Effects for Companies That Use DRAM Chips

Samsung could see global uptick thanks to unfortunate fire

There was an industry mishap that may have gone unnoticed by many, but that effected the electronics supply chains across the globe. On September fourth there was a fire that out a large portion for the SK Hynix production plant in Wuxi, China.

The plant produced over a 10% the world’s supply of the dynamic random access memory drives. The drives are a sort of memory chip that is utilized in almost all electronics. Devices like laptop computers, mobile phones and other daily utilized items rely on the DRAM to function.

Hynix is the world’s No. 2 maker of the good, and supplies every company from Apple to Dell, Lenovo to Sony.

The disruption affected the entire industry, despite going unnoticed by so many. The spot price for the benchmark unit of 2-gigabit DRAM’s jumped over 20% the next day. That equates to a high seen three years prior. Prices show no sign of lowering either, which should worry consumers for the short term.

According to Trendforce, the shipment of over 10 million smart phones and over 11 million laptops could now be affected within the next month. With a Windows 8 update PC makers are now concerned their machines simply won’t have enough juice. HP took the incident very seriously and their senior management team cleared their calendars for two days and as they said, “all we did was make sure that we have an unfair share of the available [DRAM] commodity.”

The maneuver may help out competitor Samsung, who makes the other half of the world’s supply of memory. The company based out of South Korea has decided to focus its memorymaking toward mobile DRAM and not PC types. With the market now closer to being in their control, the added supply push will help them quite a bit.

 

About Dr. David Pulman GSK

David Pulman: Global Manufacturing and Supply (http://www.quora.com/David-Pulman) provides quality capabilities and services for all companies looking for a global logistics and manufacturing strategy expert.

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