Taiwan Quake Shakes Up Memory Market: Price Hikes Loom

The earthquake that struck Hualien in Taiwan on April 3rd undeniably impacted the island’s semiconductor foundries. Even in the absence of physical damage to the facilities, lithography machines were required to halt for inspections. Micron Technology, operating locally, conducted a shutdown assessment immediately. In the aftermath, memory manufacturers have ceased disclosing DRAM contract prices for the second quarter of 2024, suggesting an impending price increase.

According to a report by DigiTimes, the earthquake disrupted operations at semiconductor foundries, affecting giants like Micron, Samsung, and SK Hynix, inevitably straining supply chains and potentially leading to a more substantial surge in memory prices than initially anticipated. Indeed, the memory sector had been experiencing a price increase even before the earthquake, attempting to recuperate from the underpricing in previous years.

Shortly after the earthquake, Micron ceased quoting prices for the second quarter’s products, with Samsung and SK Hynix quickly following suit, clearly indicating a preparation for price hikes. Historically, memory prices have skyrocketed following production interruptions caused by natural disasters or accidents, and it is presumed this earthquake will yield a similar outcome. Before the earthquake, market predictions had suggested a slowdown in the growth rate of DRAM and NAND contract prices for the second quarter to between 15% and 20%, compared to the first quarter’s increase of over 20%.

Currently, memory module manufacturers are operating with low chip inventories and are in the process of acquiring more chips to bolster their stocks. They had hoped for a deceleration in the price inflation trend; however, chip manufacturers had collectively reduced production since last year to maintain product pricing. Now, with the added impact of the earthquake, contract prices are expected to rise significantly.

In light of this situation, downstream clients, including server manufacturers, may anticipate supply shortages and proactively stock up, further driving up memory prices. However, in the consumer market, which remains in a post-Lunar New Year demand lull, prices are expected to increase, but shortages are unlikely to occur.