Power Outage at Micron – A Positive?
On July 8 bad weather in Hiroshima, Japan caused a power outage at Micron’s (MU) Fab 15 DRAM plant that lasted between 5 and 10 minutes, and while backup generators were triggered, a portion of the production tools had to be restarted and recalibrated. Fab 15 accounts for ~30% of Micron’s monthly wafer starts and ~7% of the global total and is focused on smartphone DRAM and R&D. This happened roughly a week after Renasas (6723.JP) was forced to shut down its Kawasaki fab for a week after a lightning strike that hit a power line outside of the plant.
Micron cautioned that the shutdown will have some effect on quarterly results but was still assessing the damage to wafers that were on the line during the outage, but the impact on the overall DRAM market is expected to be minimal as inventory levels are high and the industry is facing continued oversupply. Given that Micron will be working at low production levels and will likely have to scrap partially produced wafers, the resulting production losses will likely work toward bringing down inventory levels, but not enough to make an impact on pricing, other than in the spot market, with expectations for a ~10% price reduction for DRAM in 3Q remaining intact..
Micron cautioned that the shutdown will have some effect on quarterly results but was still assessing the damage to wafers that were on the line during the outage, but the impact on the overall DRAM market is expected to be minimal as inventory levels are high and the industry is facing continued oversupply. Given that Micron will be working at low production levels and will likely have to scrap partially produced wafers, the resulting production losses will likely work toward bringing down inventory levels, but not enough to make an impact on pricing, other than in the spot market, with expectations for a ~10% price reduction for DRAM in 3Q remaining intact..
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