NAND, DRAM Supplies Unhampered By Coronavirus Outbreak Reports Firm

Ramish Zafar
Samsung's 300mm wafer fabrication facility in Xian, China.

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

Global prices for DRAM modules are expected to slightly go up this year spurred by console launches from Microsoft Corporation (NASDAQ:MSFT )and Sony Interactive Entertainment. The Xbox Series X and PlayStation 5 will feature beefier specifications over their predecessors, and the consoles, when combined with new graphics processing units from NVIDIA Corporation will ensure that there's plenty of demand for DRAM. This demand, in turn, will naturally create a vacuum that will be filled by a price increase.

The recent outbreak of the novel coronavirus (2019-nCoV) in the city of Wuhan of the People's Republic of China has raised supply chain disruption-related concerns for technology companies. Cupertino, California-based designer Apple Inc, has no less than 20 suppliers based in Wuhan, and in its latest earnings call for the first quarter of the fiscal year 2020, the company's management stated that it was closely monitoring the situation in the East Asian country.

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DRAM Production In China Remains Unaffected By Coronavirus As Major Fabs Continue Operations Normally

A new report from research firm TrendForce released today talks about the coronavirus' impact on DRAM manufacturers in China. At this point, the majority of cases still belong to Wuhan city, where the virus is believed to have originated from. Luckily for DRAM supply, no major DRAM fabricator is located in the Wuhan province; therefore, the potential for novel coronavirus -related disruptions to DRAM supplies from China is yet to materialize.

As TrendForce notes, only one major Chinese DRAM manufacturer is located in Wuhan's vicinity. The ChanXin Memory Technologies (CXMT) has a fabrication plant operating in the city of Hefei, approximately 380 kilometers away from Coronavirus' epicenter. Today's report claims that the company's Hefei plant is yet to face any virus-related disruption, its expansion plan remains unaffected and it will not be affected by any logistics or transportation-related constraints imposed by the Chinese government in light of the coronavirus due to holding a special license.

ChangXin Memory Technologies' Hefei-based fabs employ 3000, uses 19nm process technology and hope to produce 120k wafers starts per month based on 10nm by the end of this year.

Out of Micron, Samsung and SK Hynix, only SK Hynix has its DRAM manufacturing facilities located inside China, but fortunately for the company, its factory in Wuxi, China is located more than 700 kilometers away from Wuhan. The Wuxi plant recently underwent an expansion through which SK Hynix intends to produce 180,000 wafers-per-month. TrendForce, however, goes on to caution that while DRAM manufacturing remains unaffected by the 2019 novel coronavirus, the disease's impact on China's logistical supply lines can not be ruled out for the near future.

Moving towards NAND supply. China's Yangtze Memory Technologies Co. and Wuhan Xinxin Semiconductor Manufacturing Co., Ltd have their facilities located inside Wuhan. Yangtze is believed to operate out of Xinxin's fabrication plant in Wuhan, but given the fact that both companies' output constitutes less than 1% of global NAND supply, any disruption to their facilities will have a limited impact on NAND supplies.

Both companies have announced that non-essential employees can work from home, but factory personnel must report to their duties according to the Chinese New Year schedule. Samsung Electronics' and Intel Corporation (NASDAQ:INTC)'s NAND fabrication facilities located inside China are believed to be safe from the coronavirus' impact due to the distance between them and Wuhan city. Both companies' facilities will operate normally as per the details of today's report. All in all, the coronavirus is yet to severely disrupt the NAND and DRAM supply chains, and by the looks of it, the overall impact of the virus on these modules will be limited.

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