Capacity slide confirmed on back of Hynix memory fire

Rival Micron to move ahead as Korean news reports suggest future Hynix deal

No memory will be made at the main Wuxi plant of the world's second-largest fabricator, SK Hynix, until November at least, analysts say.

Avril Wu, assistant vice president at DRAMeXchange, a division of market research firm TrendForce, the 4 September fire has slashed the Wuxi plant's monthly wafer production from 130,000 to 30,000 – and that remaining number has suffered smoke damage.

"Capacity has not been restored as of today. It is likely the Wuxi plant will not have any output in September and October," Wu wrote in an update this morning.

"To avoid losing clients, SK Hynix has been urgently increasing capacity at its M10 fab as well as using NAND capacity at the M12 plant for DRAM production, in hopes of minimising the impact of the fire."

This means 260,000 fewer wafers on the market, pushing rival Micron into second place in global market share terms for Q4.

Wu said SK Hynix was neck and neck with Micron in terms of second-quarter DRAM revenue, selling $2.5bn (£1.5bn) and $2.4bn respectively.

The Wuxi plant produced nearly half of SK Hynix's total DRAM output, and portions of its NAND capacity may now be allocated to DRAM to cover the losses – the result being that NAND prices are rising as well.

"Even if the supplier has inventory stocked up, a revenue drop is unavoidable. TrendForce expects SK Hynix will see the greatest revenue impact in the fourth quarter," she said.

"The new Micron group will finish developing the 20nm process in Q4. It is also rumoured that the US supplier intends to expand capacity significantly next year in Rexchip; Micron's ambition will certainly give Samsung a run for DRAM number one position in the days to come."

Meanwhile, it is expected that SK Hynix and Micron may work together in future. The Korea Times reported on Monday that the duo is considering signing a cross-licensing deal on memory chip patents, which would follow Hynix's similar deal with Samsung. US-based Micron – which itself has a conventional-DRAM patents partnership with top-ranked Samsung – is looking at investing more in mobile DRAM.

According to the Korea Times, SK Hynix is likely to increase its share of NAND flash and mobile DRAM as well.

"The industry is entering an unprecedented time, with prolonged high margins and low volatility that should continue for years," the report said.

This is the second fire at a Hynix plant; the last was in a Korean fab in 2008.