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SK Hynix Expects to Reopen Fire-Damaged Plant in China Soon

SK Hynix Inc. (000660), the world’s second-largest maker of computer-memory chips, said it expects to resume operations at a fire-damaged plant in Wuxi, China, “in a short time,” so supply volume won’t be affected.

There was one minor injury from yesterday’s blaze and no major damage to production equipment, Icheon, South Korea-based SK Hynix said in an e-mailed statement. The company said it’s still investigating the cause of the fire.

“Currently, there is no material damage to the fab equipment in the clean room, thus we expect to resume operations in a short time period so that overall production and supply volume would not be materially affected,” SK Hynix said. The majority of the cost of the damage will be covered by insurance, it said.

The factory makes dynamic random-access memory chips for mobile phones and personal computers. SK Hynix, which supplies chips to global smartphone manufacturers including Apple Inc., said in July there was limited second-half supply growth for memory chips. Lower-end smartphones will drive demand for dynamic random-access memory, or DRAM, chips, it had said.

The fire started at 3:50 p.m. local time yesterday during deployment of equipment and was extinguished by 5:20 p.m., the company said. The fire produced large amounts of black smoke that made it look more severe that it was because it was concentrated in air-purification facilities.

Hynix shares rose 0.7 percent to 28,650 won at the close in Seoul. The stock has gained 11 percent this year, compared with a 3.2 percent decline in the benchmark Kospi index.

Competitors Micron Technology Inc. (MU) and SanDisk Corp. (SNDK) rose in U.S. trading yesterday as Sterne Agee & Leach Inc. cited potential disruption to SK Hynix’s supply. The shares later pared their gains.

To contact the reporters on this story: Jungah Lee in Seoul at jlee1361@bloomberg.net; Joshua Fellman in New York at jfellman@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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