DRAM It: Micron Fab 'Event' Could Worsen Global Shortage

TrendForce reports that Micron suspended the operation of its Fab-2 DRAM production facility on June 1 due to a malfunctioning nitrogen gas dispensing system. Micron responded that while there was an event, it didn't involve nitrogen leaking. However, Micron's admission of a problem is telling, as TrendForce predicts the event will eliminate 5.5% of the global DRAM production capacity for July. Interestingly, the market analyst firm also claims this could lead to an impact on production for Apple's new iPhone.

The 5.5% output reduction may not sound like a significant event, but in the past, similar issues have served as the catalyst for massive shortages. This could exacerbate the ongoing DRAM shortage, which has already seen DRAM prices rise appreciably.

DRAM prices are on the rise due to slow transitions to new nodes and increased demand in PC, mobile, and server segments. TrendForce predicts that the first quarter of 2017 suffered a 30% increase in the average contract pricing for DIMM modules. Making matters worse, the soothsayer predicts that we will see another 10% increase this quarter, and that is before accounting for the recent production interruption.

Micron recently finished its long-overdue purchase of Inotera. The production shut-down occurred at an Inotera fab, and TrendForce estimates the fab suffered a loss of around 60,000 wafer starts per month out of the fabs' normal 125,000 wafer starts per month. According to TrendForce's self-described conservative estimates, that equates to 5.5% of the global DRAM supply for July. That should kick off yet more price increases across the board. The analyst firm also contends that the cleaning and restoration process will be a "time-consuming challenge," so it appears the fab will take some time to bounce back to normal production levels.

TrendForce also notes that the Inotera fab pumps out LPDDR4 products for iPhones, so we could see delays on Apple's latest smartphone.

Micron released a statement, via Reuters, acknowledging a "minor facility event," but notes that operations are still in the process of recovery.

"Regarding recent rumours about Micron's fabrication facility in Taoyuan, Taiwan, Micron hereby clarifies that there was no nitrogen leaking incident nor evacuating of personnel," Micron said in a statement. "There was indeed a minor facility event but operations are recovering speedily without material impact to the business."

A quick glance at DRAM pricing on Amazon reveals just how bad the shortage already is, and any significant long-term disruption could be devastating to the global DRAM market, which already has a razor-thin margin of error. We've reached out to Micron for comment and will update as necessary.

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