Press Center

Suspension of Inotera’s Fab Disrupts DRAM Market; TrendForce Forecasts 5.5% Reduction in Global Production Capacity in July and Further Price Increases

Inotera, which is also known as Micron Technology Taiwan, suspended the operation of Fab-2, one of its two fabrication plants in Taiwan’s Taoyuan City, on July 1. The malfunctioning of the nitrogen gas dispensing system led to the contamination of wafers and equipment in the facility. DRAMeXchange, a division of TrendForce, estimates that Inotera has suffered a production capacity loss of around 60K wafer starts per month, out of the supplier’s previous total of 125K wafer starts per month (K = 1,000). This conservative estimate also amounts to a 5.5% cut in the global DRAM production capacity for this July. The temporary shutdown of Fab-2 is expected to aggravate the current undersupply situation in the DRAM market and cause further price increases for memory products.

DRAMeXchange points out that 60K capacity loss figure excludes the number of wafers not being processed by Fab-2 during this period of shutdown from July 1 up to now. Inotera plans to have Fab-2 resume operation as soon as possible, but the cleaning and the restoration of production capacity will be a time-consuming challenge.

DRAMeXchange puts the average monthly production capacity of the entire DRAM industry at 1,135K wafer starts for this third quarter, while Fab-2 is estimated to have achieved a monthly capacity of 60K prior to the contamination event. With Fab-2 suspending operation, the global DRAM production capacity for July has been reduced by 5.5%.

Inotera’s product mix includes PC, server and mobile DRAM products. Hence, a production disruption from its end coupled with the already strained supply situation will have an impact on all segments of the DRAM market.

Inotera is also mainly responsible for manufacturing Micron’s LPDDR4 products that go into Apple’s supply chain for iPhone. The temporary shutdown of Fab-2 could have an impact on shipments of the upcoming new iPhone devices as well.

Both DRAM buyers and suppliers are still weighing the extent of damages caused by the contamination event at Fab-2. The negotiation pertaining to the third-quarter contracts are likely to be affected by some uncertainty over whether the facility can quickly resume operation. Some suppliers are already hinting that price hikes are on the horizon. While the event’s long-term effect on DRAM market remains to be seen, DRAMeXchange expects tighter squeeze on the supply and strengthening of the current price upswing.

Previous Article
Samsung plans $18.6 billion South Korea investment to widen chip lead
Next Article
Global ASPs of LED Light Bulbs Rose Slightly in June Due to Arrival of Pricier Smart Lighting Products, TrendForce Reports

Get in touch with us