Hynix Says China DRAM Plant Hit by Power Outage

Shares in Hynix Semiconductor, the world's second biggest maker of memory chips, fell Tuesday on news its production of dynamic random access memory (DRAM) chips had been disrupted in a power outage.

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Hynix said the outage, at a plant operated in China jointly with Numonyx, would not cause significant damage as emergency power generation immediately started. It said power had been completely restored and preparations were being made for normal operations.

Shares in Hynix fell more than 4 percent at market open but pared losses later. Shares in larger rival Samsung Electronics fell 0.96 percent, but shares in smaller Japanese rival Elpida Memory were up over 4 percent as some investors expected the power disruption to reduce global output and therefore raise the chips' prices.

Makers of DRAM chips worldwide have been mired in a steep market downturn for more than a year, with prices of some key chips falling more than 90 percent since early 2007.

"If we assume that around 30 percent of monthly capacity was affected by the power outage, this may affect around 3-4 percent of monthly global DRAM supply for the coming one or two months," said CW Chung, an analyst at Lehman Brothers in a note.

Chung drew comparisons with last year's outage at Samsung Electronics, which disrupted output but eventually had little impact on prices.

He noted that the situation was different in the case of Hynix as the power outage occurred against a backdrop of industry capex cuts.

"This should help supply-demand dynamics more positively than last year's case," Chung said.

An analyst at NH Investment & Securities estimated that the outage could reduce worldwide DRAM output for May by about 5.6 percent.

Numonyx is a joint venture owned by STMIcroelectromics, Intel and Francisco Partners.