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SK Hynix Inc, the world's second-largest maker of computer memory chips have suspended their operations at a factory in China after a chemical explosion.
A little after 3.50pm local time the explosion happened at a plant in Wuxi, China. By 5.20pm local time the fire was extinguished. Within the first hour of the fire breaking we have already seen memory prices shoot up by 10%. We can only presume that these prices will sky rocket in the next few days.
SK Hynix makes around 30% of the world's memory in this area, and due to the fire it will now loose half its production. This means that the world production will drop by 15%. This is not good news for companies such as nVidia, as this is one of the main factories that is used to make the GDDR5 that goes on the graphics cards. This is going to have a severe effect on production and pricing with nVidia. Inevitably nVidia will be making the switch to other sources and as such AMD's price for Radeon RAM will also jump. With this in mind NOW might be the right time to get that all important upgrade to the GeForce GTX Graphics card before the prices soar.
We have also been informed that major memory brands have stopped shipping anything, until they confirm the full extent of the damage and how this will effect the markets including reactions. This also doesn't bode well for smartphone manufacturers including Apple Inc. who said in July there was a limited second-half supply growth for memory chips. Lower-end smartphones will drive demand for dynamic random-access memory, or DRAM, chips in the second half, it had said.
We can all only wait to see what the full extent of the damage to the plant and market will be in the coming days...