Flash memory giant Japan two factories unexpectedly stopped production! Risks in the global semiconductor supply chain have surged

On Thursday, Western Digital and Japan's Armored Man (formerly Toshiba Storage) issued an announcement that part of the business of the two factories jointly operated by the two companies in Japan was affected by production line pollution, which means that the supply of flash memory chips of the two companies may have a large loss.

Flash chip supply may be significantly damaged

Western Digital and Kaoxia are among the world's largest producers of flash memory chips. The two companies said that since late January, production at two factories jointly operated by the two companies in Japan's Yokkaichi and Kitakaichi has been affected due to contamination of materials used for flash memory chip production, and the two companies will resume normal operations as soon as possible.

Judging from the announcements of the two companies, they have not yet determined the cause of the accident and the time of the accident, nor is it clear how serious the specific damage will be. Western Digital said it expects its supply to be reduced by "at least 6.5 exabytes," while the announcement did not disclose specific loss figures.

EB is a unit of measurement of information, and its conversion relationship to common storage units is: 1EB = 1,000 PB; 1EB = 1,000,000 (10 to the 6th power) TB; 1EB = 1,000,000,000GB。

Wells Fargo analyst Aaron Rakers said data revealed by Western Digital suggests that the total loss of supply, including The armored man's share of production at these plants, is expected to be about 16 exabytes — which is equivalent to about 10 percent of global market consumption in a single quarter.

According to Trendforce, an international high-tech industry market research institute, Western Digital and Jiaoxia account for 32.5% of the overall NAND flash memory market output, and this incident may affect 13% of the company's flash memory chip production in the first quarter.

Flash memory prices may rise further

Analysts generally predict that this production accident will cause a further increase in the price of flash memory.

Hideki Yasuda, an analyst at Ace Research Institute, said, "Flash memory prices are sure to rise, further exacerbating the recent upward trend in component prices due to supply shortages. "

Wells Fargo's Razers wrote: "While the disruption of Western Digital and The Armor Flash business can certainly be seen as a negative impact, historically, disruptions in flash production (earthquakes, power outages, etc.) have had a positive impact on both Nand Flash pricing and stock prices. ”

Jibang Consulting predicts that under the influence of this event, the price of flash memory chips will rise by 5% to 10% in the second quarter of this year, which will eventually affect the downstream products that will be transmitted to SSD and NAND flash memory chips. However, this forecast only takes into account the loss of capacity of Western Digital, and if the loss of capacity of the armored man is superimposed, the price increase of flash memory chips may be even greater.

Affects or lasts for months

A spokesperson for Kaoxia said the company does not expect the shipment of its traditional 2D NAND flash memory to be affected, but some production of 3D flash products with higher profit margins has been affected. The company will continue to ship from inventory, but will reduce shipments in the short term.

Although Western Digital and Kaoxia's statements did not give an expectation of when production will resume, given the long production cycle of 3D flash memory chips (chips from silicon wafers to finished components that can be used for electronic devices, which typically take about three months), the impact of this production interruption event may continue into the months after production restart.

South Korea's Samsung Electronics, SK Hynix and The United States Micron Technology are all major producers of flash memory semiconductors.

In the U.S. stock market, Micron Technology shares closed up 3.29 percent on Thursday after Western Digital announced the shutdown of its Japanese factory. On Friday, in the Korean stock market, the share price of SK Hynix rose by 1.16% as of press time.