SK Hynix is the world’s second largest supplier of DRAM (dynamic random access memory) chips, claiming about 20 percent of global market shares in the industry. These chips are necessary to store data in computers, as well as mobile devices such as smartphones, laptops, tablets, and notebook computers. Hynix is a South Korean based company with two major manufacturing facilities, one located in South Korea and the other in Wuxi, China. On September 4, a fire in the Chinese facility, reportedly caused by a natural gas leak, halted production of the DRAM chips. Prices for the chips spiked immediately in anticipation of a worldwide shortage of DRAM memory, but due to solid inventory reserves, no actual shortage has yet occurred. Hynix supplies large customers which produce huge volumes of computers and mobile devices, including Samsung and Apple. None of Hynix’ customers have yet reported a delay in production or shipment, but market analysis cited in Forbes magazine said that an eventual shortage of DRAM chips is almost certain.
Partial production has resumed in the Chinese factory, but there is no official word on when full operations might resume. Some believe this will take between four and six months, leading to an eventual worldwide shortage in DRAM chips at least through the end of this year.
Fortunately, there were no fatalities reported due to the fire, and only one minor injury was sustained. Though the photos of the fire at the massive manufacturing facility were dramatic and frightening, experts said the fire broke out in a place where relatively few human lives were in danger.
Hynix’s disaster follows their best single quarter profits in history, according to an announcement by the company in June. The company’s operational profits from April to June (quarter two of 2013) was the equivalent of $1 billion U.S. dollars.
Global Procurement & Supply Chain Professionals Read This…
…Carefully curated procurement & supply chain issues that make you look smart, sent to your inbox every week.
PLUS: Get the FREE Procurement Case Study when you subscribe: “How McDonald’s Overcame Global Supply Chain Obstacles”