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Samsung power glitch drives up price of memory

David Manners
Friday 31 August 2007 09:25

Samsung has been coming under pressure to reveal more details of the reason for the power outage which caused a production glitch at its semiconductor plant in Giheung earlier this month.

Samsung said the outage, which affected NAND flash production lines, was accidental. One company official said it was "as mysterious as a car suddenly accelerating".

The firm specifically did not blame its local electricity supplier, the Korea Electric Power Corporation.

The firm, the largest NAND flash supplier, said it did not expect a meaningful loss of wafer production but there was a positive effect on both memory prices and the share prices of memory chip makers.

The NAND price has gone up nearly 20 per cent, while DRAM prices, which had been falling all year, with unit volumes rising 23 per cent in Q2 for overall revenue decline of 24 per cent, have stopped falling.

According to market watcher iSuppli, the production outage may deliver an upside for the whole NAND flash memory market, and "it came at a critical juncture in the NAND market, when conditions are set to shift from shortage to oversupply".

The SOX index of chip shares has also been pushed upwards on the back of rising share prices at memory manufacturers, despite the general turmoil on world stock markets. The DXI index, published by DRAMexchange, which integrates memory prices with the share prices of memory makers, have both trended upwards in recent weeks.

Although there is no logical connection between a brief interruption in commodity chip supplies and a subsequent price rise, there has been some evidence of this in the past.

 

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