* Wuxi plant makes nearly 15 pct of global DRAM chips
* Market worried long shutdown could push up chip prices
* 2-3 week restart estimate is preliminary -source
* Hynix has 2-3 weeks DRAM supply -source
* Little impact seen on mobile DRAM chips -source
By Miyoung Kim
SEOUL, Sept 6 SK Hynix Inc's
fire-hit China plant, which produces half of its computer memory
chips, is likely to resume operations within 2-3 weeks or even
earlier, said a source familiar with the situation, citing a
preliminary estimate of the damage.
Wednesday's fire at the plant of the key Apple Inc
supplier has caused concern that a prolonged suspension of
operations, such as a shutdown of a month or more, would push
chip prices sharply higher. The factory produces nearly 15
percent of global DRAM semiconductors.
"Operations are likely to resume soon... possibly within two
to three weeks or even earlier, but it's still an early
estimation, and a clearer picture will emerge by next week," the
The source declined to be identified as the plan has yet to
be made public.
"Damages are minimal and (chip) wafer losses are quite
small, as the fire was mainly in the ventilation area and major
production facilities including the clean room were not
affected," the source said.
The source said Hynix has around 2-3 weeks of DRAM
inventory. That would indicate longer-term global supply is
unlikely to be hugely affected if the plant restarted within
that time frame and was able to ramp up to full capacity shortly
MARKET STILL WORRIED
Underscoring worries about the impact of the fire at Hynix's
Wuxi plant, spot prices of DRAM surged 16 percent on Thursday,
according to price tracker DRAMeXchange. They traded steady on
Shares in Hynix also fell further on Friday afternoon
despite the source-based outlook, ending down 3.7 percent and
taking losses since the fire to 5.4 percent.
"Despite Hynix's assurance, markets are still concerned that
it would be difficult to quickly restore operations to full
throttle as they'll have to go through testing processes and
other procedures to ensure a smooth run," said Peter Lee, an
analyst at Woori Investment & Securities.
"Given that they account for over 12 percent of global DRAM
supply, supply is likely to become short and prices will rise
naturally. Some customers will be stockpiling early," he said.
The source also said little impact was seen on mobile chip
supply as the Wuxi plant produces DRAM chips used in computers
and servers, and not DRAM chips for smartphones and tablets.
That would be a relief for customers such as Apple which is
expected to release a new iPhone next week.
Analysts have cautioned, however, that mobile DRAM supplies
as well as NAND flash memory chip offerings could be affected if
Hynix was forced to shift some of that manufacturing capacity to
computer chips to make up for lost production.
The South Korean company says much of the one-off costs of
the fire will be covered by insurance.
Analysts have offered mixed opinions about the fire's impact
on Hynix's earnings. Hynix reported a forecast-beating record
quarterly profit in the second quarter thanks to a near doubling
in DRAM chip prices as industry efforts to reduce a supply glut
Some analysts say production disruptions will likely result
in short-term hit to profits but Deutsche Bank said the revenue
impact could be neutral as the decline in shipments would be
offset by higher chip prices.
For every 5 percent production loss, Hynix needs to see a 10
percent rise in PC DRAM prices to keep its earnings unaffected,
Hynix, which commanded 30 percent of the DRAM chip market in
the second quarter, competes with bigger rival Samsung
Electronics Co and third-ranked Micron Technology
Inc. Samsung had 32.7 percent of the global DRAM market
in the second quarter and Micron held 12.8 percent, according to
Samsung shares have gained 2.2 percent since Wednesday's