After the strong earthquake, preliminary impact assessment on memory and wafer foundry production lines

On April 3rd at 7:58 am, a 7.3-magnitude earthquake occurred in the sea area of Hualien County, Taiwan (23.81 degrees north latitude, 121.74 degrees east longitude), with a depth of 12 kilometers. According to TrendForce's immediate investigation of the damage and operational status of various factories, the DRAM industry is mainly concentrated in the northern and central regions, while the Foundry industry is spread across the northern, central, and southern regions. This morning, the earthquake in the northern LinKou area was around magnitude 4 to 5, while in other areas it was around magnitude 4. Factories have started to shut down for inspections. Although the inspections are not yet complete, so far no significant machine damage has been found in any of the factories.

TrendForce pointed out that statistics on line breakage and furnace tube damage are being compiled, and it is estimated that manufacturers will be able to recover production capacity through expedited work, with no major disasters occurring. In addition, regarding the recent market concern about AI supply, as NVIDIA chips using the 4nm process are produced at TSMC's Nanke plant, although the factory personnel have not been evacuated, some machines need to be shut down for inspection. TrendForce estimates that operations can be quickly restored after adjustments, and the impact is manageable.

In terms of memory, since Micron's DRAM production capacity is mainly concentrated in Taiwan, the company has taken the lead in suspending DRAM quotations. After assessing post-disaster losses, negotiations for 2Q24 contracts will be restarted. Additionally, Samsung and SK hynix have also followed suit in suspending quotations. Although the two major suppliers do not have DRAM production facilities in Taiwan, they are also waiting to observe the market before taking further action.

On the other hand, due to the recent softening demand in the DRAM and NAND Flash spot markets for several weeks, despite the earthquake causing shutdowns at Micron and Nanya, the current spot supply remains sufficient. Spot prices did not experience significant fluctuations today due to the earthquake, with only a slight overall increase, and buying interest remains subdued.

TrendForce predicts that short-term DRAM spot prices will experience a slight increase, but the weak demand trend remains unchanged, and the sustainability of price increases needs to be observed. At the same time, as DRAM suppliers are currently mostly suspending quotations, module manufacturers have also followed suit in suspending quotations.

Source: TrendForce, original article title: "Preliminary Impact Assessment of Memory and Wafer Foundry Production Lines After Strong Earthquake"