For most businesses, a brief power outage wouldn’t cause more than a momentary hiccup, or a longer-than-average coffee break. Western Digital and Toshiba, however, are dealing with a problem of vastly larger proportions, and NAND production at both companies will take a serious hit this quarter as a result.
The 13-minute power outage affected wafers that had been processed, the facilities, and the actual production equipment. Apparently, the result will result in overall production for the quarter being reduced by 6EB, or exabytes. (There are 1000TB in a petabyte, and 1000PB in an exabyte). Put simply, the loss of 6EB represents a great deal of dead or unproduced NAND. There’s some implication that the actual damage could be higher, with as much of 9EB of NAND going un-made.
If that seems like an astronomical amount of NAND to damage at once, well, it is. The factories have apparently been offline since the outage on June 15, and aren’t expected to spin back up until mid-July. This implies that the power failure wasn’t just a blip or one-time event — clearly, WD and Toshiba are doing major investigatory work to identify and isolate the cause, and the fab is mostly shut down because of it. 6EB represents roughly half of WD’s quarterly NAND production, which gives some idea just how bad the impact is. The Yokkaichi Operations facility where Toshiba and WD operate their joint fab produces ~35 percent of the world’s NAND. Fabs 2, 3, 4, 5, and 6 were affected by the outage, which indicates it wasn’t confined to a single building or part of the overall facility.
A capacity failure this large could have an impact on the overall NAND market, which isn’t exactly doing well these days. According to Trendforce, however, the size of that impact will depend on which products you examine. 2D NAND production, which has faded to specialty storage applications, will likely be significantly impacted and could see prices rise. 3D NAND, however, is less likely to be impacted. Inventory of these parts is currently high and some contract prices have already been negotiated. TrendForce predicts that there’s at least some chance that this power disruption, combined with the other steps manufacturers have taken to reduce production, could reduce the slide in NAND prices. Currently, that slide is expected to last into Q4, though the decline may now be smaller.
Don’t expect these NAND prices to stick around forever, but buying should be good through at least the end of the year, even with this recent shutdown. Unlike the hard drive market collapse back in 2011, when Taiwanese flooding shut down much of the industry, the market seems to be able to buffer this shutdown.
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