A power failure in Yokkaichi, Japan has thrown Toshiba and Western Digital’s flash supply into chaos. The temporary loss of manufacturing capacity will reduce global flash supplies by about 25 per cent between August and October and this in turn may fuel short-term price rises of 5-10 per cent.
On June 15 a 13-minute outage hit Japan’s Yokkaichi region, where Toshiba Memory Corporation (TMC), WD’s joint venture partner, produces flash chips.
The blackout affected process machinery which are still not working properly. Full production will resume by mid-July, according to a Reuters report.
WD anticipates a reduction of flash wafer availability of approximately six exabytes, most of which will hit the August-October quarter (its first quarter of fiscal year 2020).
Gone in a flash
Aaron Rakers, a senior analyst at Well’s Fargo, informed his clients that flash wafer process/production time is more than 10 weeks. That is why so much flash chip capacity, the ~6EB, has been lost.
Rakers estimates WD shipped about 11EBs of NAND capacity in 2019’s February-April quarter (WDC’s Q3 fy2019) with 12.3EBs shipping in the 2019 May-June quarter.
Wells Fargo’s industry checks suggest “WD had communicated indications of price increases following the Yokkaichi outage – we think a +5-10 per cent price impact could be considered.”
In other words WD will ship half the flash bits it expected to ship in the Aug-Oct quarter and could lose up to half its expected flash chip revenues for the quarter, subject, of course, to any temporary price rises.
Toshiba is even worse affected. Rakers thinks there is a 40/60 bit production split between WDC and Toshiba. If correct, this means Toshiba will lose ~9EB because of the power cut.
In response to the Yokkaichi blackout, TrendForce has adjusted NAND price trends for the third 2019 quarter. The market research firm thinks the downswing in prices of 3D NAND products may moderate in the quarter, and the supply of 2D NAND, mostly used in specialist storage applications, will tighten up noticeably. Overall it thinks that NAND contract prices will trend flat or drop slightly.
