Q2 DRAM Output Unaffected by Taiwanese Earthquake

DRAM Output, impact, Negligible, Q2], Taiwanese Earthquake

The magnitude 7.2 earthquake that struck Taiwan on April 3, 2024 sent shockwaves through the country, raising concerns about the impact it could have on chip production, particularly in the DRAM industry. Taiwan, known for its robust earthquake preparedness measures, was faced with its strongest earthquake in 25 years, posing a significant challenge to the country’s chip manufacturers. However, research compiled by TrendForce suggests that the Taiwanese DRAM industry has managed to remain largely unaffected by the earthquake.

Taiwan is home to four major memory makers, including Micron, the sole member of the “big three” memory manufacturers on the island. Micron operates two fabs, while the other players, Nanya, Winbond, and PSMC, have one fab each. According to TrendForce, these DRAM producers quickly resumed full operations after the earthquake, although they did have to discard some wafers. The impact on Q2 DRAM production is estimated to be minimal, with only a 1% effect on overall output, which is insignificant in the grand scheme of things.

In fact, the earthquake has actually had a positive impact on Micron’s production of DRAM. As the company ramps up production on its 1alpha and 1beta nm process technologies, it is able to increase bit production of memory, leading to a boost in the supply of commodity DRAM in Q2 2025.

Following the earthquake, there was a temporary halt in quotations for both the contract and spot DRAM markets. However, the spot market quotations have already largely resumed, while contract prices have been slower to recover. Notably, Micron and Samsung halted issuing quotes for mobile DRAM immediately after the earthquake, with no updates provided as of April 8th. In contrast, SK hynix resumed quotations for smartphone customers on the day of the earthquake and proposed more moderate price adjustments for Q2 mobile DRAM.

TrendForce predicts a seasonal contract price increase for Q2 mobile DRAM, ranging between 3% and 8%. This moderate increase can be attributed to SK hynix’s restrained pricing strategy, which is likely to influence pricing strategies across the industry as a whole. The earthquake’s impact on server DRAM primarily affected Micron’s advanced fabrication nodes, potentially leading to higher final sale prices for Micron’s server DRAM. However, it remains to be seen which direction future prices will take.

While the earthquake had a significant impact on the DRAM industry in Taiwan, DRAM fabs outside of the country remain unaffected. This includes Micron’s HBM production line in Hiroshima, Japan, as well as Samsung’s and SK hynix’s HBM lines in South Korea, all of which are operating as usual.

Overall, the DRAM industry has demonstrated resilience in the face of the earthquake, experiencing minimal disruptions and a swift recovery. The presence of ample inventory levels for DDR4 and DDR5, combined with weak demand, suggests that any slight price increases resulting from the earthquake are expected to normalize quickly. The only potential exception to this is DDR3, which is nearing the end of its commercial lifetime and already seeing a decrease in production.

In conclusion, the Taiwanese DRAM industry has managed to weather the impact of the magnitude 7.2 earthquake with minimal disruptions. Thanks to their robust earthquake preparedness measures, DRAM manufacturers in Taiwan were able to resume full operations quickly, albeit with some discarded wafers. The positive effects of Micron’s increased bit production of memory and SK hynix’s more moderate pricing strategy for Q2 mobile DRAM are expected to contribute to the industry’s recovery. Meanwhile, DRAM fabs outside of Taiwan remain unaffected by the earthquake, ensuring a stable supply of chips. Overall, the industry’s resilience and ability to overcome challenges demonstrate the strength and adaptability of the DRAM market.

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