Micron Fab 11, located in Taichung, Taiwan.
We learned after a conversation Financial conference over the phone Micron’s DRAM shipments will shorten in the quarter. These supply cuts resulted from accidents that occurred on two different Taiwanese FAPs in December, but CEO Sanjay Mehrotra confirmed the effects of the unrest on January 7. As a result, DRAM prices per micron are likely to rise as supply dwindles. Micron expects to solve the problem gradually over time, citing this in the second half of 2021 as a return to normality.
The disturbances in question were not systematic and in no way catastrophic. However, the effects are far-reaching. The first related to the power outage at Micron fab 11 on December 3, in which the facility went out of power for about an hour. The second accident was related to a nearby magnitude 6.7 earthquake, which caused the same FAB 11 and 16 to stop operating for an indefinite period of time on December 10. The facilities did not report any damages to our knowledge.
These seem like minor inconveniences to those who are unfamiliar with manufacturing processes, but as we said, the consequences of disrupting these high-cost facilities are where the problems arise. Micron makes all of its money from size and process efficiency. Factories house equipment that can cost millions of dollars, while also requiring highly trained personnel to maintain and operate. When utilities lose power, the assembly lines must be reset, recalibrated, etc. Silicon chips that were in the middle of production can also suffer irreparable damage, forcing the company to dump the raw materials. Other protocols such as the cleanroom specification come into play as well. Needless to say, it’s a big problem.
Get back on track
This is of course an especially bad timing, as there are a bunch of computer components like AMD CPUs and GPUs that are already under-rendering (albeit for various reasons). Adding DRAM to the list is the last thing consumers want to hear during a time when upgrading or purchasing new gaming PCs is especially exciting. However, this is the reality of the situation at the moment.
Thankfully, Micron expects to get back on the right track soon and this is just a temporary setback. These incidents are unavoidable, but it looks like anyone looking to make a PC-related purchase in the latter half of 2021 will be doing well. In fact, Micron determined that it was working to “lower DRAM cost in FQ2” as well as node ramps meaning more efficient products in the future. Those are most likely a reference to DDR5 modules, Which should also arrive alongside Intel’s Alder Lake CPUs near the end of 2021 and likely AMD’s Zen 4 lineupMost likely in early 2022.
While this incident is unfortunate, it may have been better when it did, rather than the next-generation DRAM launch approaching. Memory has less impact on performance than CPUs and GPUs, so most of them should be able to withstand older models while Micron restores DRAM supplies and pricing to a better condition.