After an accidental power cut near one of Samsung’s plants in Seoul, Korea that forced some six factories to halt production, the number one DRAM manufacturer may face a serious problem with NAND flash supply. Used in portable media players, cell phones, and other such devices, the recent event has cost the company an estimated loss of over $54 million. Moreover, the immediate, non-contract price of a regular chip has already soared 9% as a result of the incident.
“The accident could also trigger a cascade effect that may affect supplies in a crucial period, according to analyst Lee Min-hee of Dongbu Securities. Samsung's production queues at the affected factories may be set back by up to a month as the company not only has to restart the manufacturing process but discard or recycle chips on the halted lines. The nature of flash memory dictates that many of the flash memory chips will fail outright if left unfinished, the analyst said. Dropping these supplies could result in a particularly dangerous shortfall of flash memory as consumer electronics firms ramp up for holiday product launches.”
It has been predicted that Apple may take the most serious hit since its iPods and iPhones reportedly use 25% of all memory manufactured by flash makers. Furthermore, Samsung’s recent misfortune has shifted investment interest toward alternate companies like Hynix and Toshiba, which produce similar flash memory.