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Fire At Chip Production Plant Creates Memory Shortage

Wednesday, September 18th, 2013 | Author:

rollercoaster-RAMA fire that occurred recently at the SK Hynix DRAM production plant in Wuxi, China, caused a disruption in the plant’s production of memory chips. Fortunately, it looks like no one was seriously injured during the fire. However, whenever there is a problem at a DRAM production plant of this magnitude, it can have a major affect on memory supply and, in turn, affect memory prices.

The South Korea-based firm is the world’s second largest manufacturer of DRAM chips, and the Wuxi factory accounts for half of its output. Hynix, Samsung and Micron make up the lion’s share of the DRAM market with Hynix representing about 30% of the overall market, so an impact of that magnitude to DRAM product which goes into everything from memory, to phones and tablets, is going to cause a shortage in the market. This, of course, results in DRAM prices going up.

A 30% Impact on Future Supply

At OWC, we constantly follow pricing and availability of components and try to be upfront with our customers about fluctuations in component prices. What was a 19% reported increase is now a 30% real-world impact on our future supply. This marks the most significant, abrupt increase in three years.

Is this the Cheapest You’ll See Memory for a While?

I’ve long advocated that memory is always a great investment when you need it. Installing more memory is simple and will go a long way to speed up you Mac (or PC). This shortage doesn’t mean load up on memory if you don’t need it. In fact, please don’t do that – a panic rush will see prices rise faster and even more.

Our current memory pricing does not yet reflect the higher cost of memory modules we now have in production in our facility North of Austin, TX. Our costs, as noted, are up as much as 30% now for the DRAM these modules utilize. As these modules come off the line and are averaged in, we have no choice but to increase prices accordingly.

I am hoping that things get better sooner than later… Hynix has stated that their actual wafer fab is fine, just a matter of clean up and moving post production packaging. That being said – whenever there is an impact like this, it can take weeks if not months for things to normalize and for supplies to catch back up.

Bottom line- the pricing right now *Today* is as good as it’s likely to be for a while.. Over the near term, prices are going up. Even after the Hynix event no longer has impact, and assuming no other surprises – I do not expect prices to return to ‘Pre-Hynix Fire’ levels, never mind go lower than what we are offering today, until at least 2014 and potentially well into this new year. If you need memory, now is not the time to hesitate.

OWC Memory

Why? Because we build memory for Apple computers, and Apple computers have some of the most rigid specs in the industry. So, what better memory to buy than memory made by people who build for Macs first? Of course, a lifetime warranty always helps, and our award-winning customer support and install videos mean we’re available to help during the entire upgrade process!

Our easy to use memory guide will help you find the right memory for your system.

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    1. Michael says:

      I upgraded my Mac Mini memory from 4 to 16GB several months ago and it was absolutely one of the most amazing transformations I’ve ever experienced in computing. Mountain Lion can easily gobble nearly 4GB before doing much of anything else. Faster, smoother, and a whole lot less beach balls.

    2. OWC Larry says:

      One more bit… while they last – might check out some of the memory we’ve got on the garagesale/clearance:
      http://eshop.macsales.com/Search/Search.cfm?Ntk=Primary&Ns=P_Popularity|1&Ne=5000&N=6999&Ntt=owc.garage.sale

      This is stuff from trade ins, etc – tested & warranty backed. This stuff was priced with basis that was pre-fire.

    3. Matthew says:

      You put up prices earlier in the year and I’ve been waiting for them to come back down and now they’re going up even more. I guess I’ll be holding off on RAM upgrades indefinitely now.

      • OWC Larry says:

        Prices go up because costs go up.. and we warned back in March about the overall direction that began pretty much with the new year then too..
        http://blog.macsales.com/17174-memory-prices-taking-an-upturn

        And, fwiw, no one remembers when it was higher… But go back 2-3 years and it was – a lot higher…. 8GB kits were well over $100… 16GB kits well over $300. There was then an amazing decline in costs – as manufacturers fought to ensure their capacity was being sold in a market with, at the time, way too much capacity and supply. This was great for all of us – but, you can look at how Micron did over the the prior 5 years (unlike Hynix and Samsung, as a publicly traded US company on US exchanges – they have to disclose the details) and get a flavor for the billions of dollars lost in that market situation. Eventually something was going to change… and it did… Many of smaller memory producers and even a larger ones effectively went out of business (Qimonda(Siemens spin off) for example) or moved into more lucrative and less competitive niche spaces. At the same time, NAND demand began to exponentially increase and you’ve got capacities being shifted to this new, also more lucrative chip production. And now we’re left with three major producers and a few smaller ones… who are not going to invest unless demand is there to keep prices above true, equipment depreciated, production costs.

        No – memory isn’t as cheap as it had been…. but it’s still a good investment for the performance benefit it offers. Adding more memory and an SSD too together costs less than what Apple’s typical price to upgrade a CURRENT system to a faster processor… and guess what, for most applications – the faster processor provides less benefit in a the same Mac left with stock hard drive and/or less than memory than the apps can benefit.. and, usually, a Mac even years older – upgraded to adequate memory alone can out perform it with such apps. Memory is cheap for the benefit it brings, even if not as cheap as it had been.

        We strongly dislike higher memory costs… does nothing for us or customers. That said – it remains a great benefit… no different than even further back when even 4GB costs a lot more than 8GB and even 16GB costs today.

        The best time to buy something is when it is needed and can provide a benefit. Prices go up and down – and the overall trajectory of memory for the much longer term is and will remain downward to flat. If you need it though, the benefit should always more than justify what is paid in the then and now.

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