Both Western Digital (WDC) and Kioxia have announced a contamination issue at the companies’ two Flash Ventures wafer fabrication plants in Yokkaichi and Kitakami. Let’s have a look at what’s been said so far as The Memory Guy gauges how important it will be for these companies and for the industry.
WDC was the first to announce the issue, with a brief but helpful statement. According to the WDC announcement:
…contamination of certain material used in its manufacturing processes has occurred and is affecting production operations at both its Yokkaichi and Kitakami joint venture, flash fabrication facilities.
The announcement went on to share the company’s estimate that WDC’s flash output would be reduced by at least 6.5 exabytes.
Kioxia’s announcement came a little later and was less detailed:
Kioxia Corporation announced today that in late January, contamination of the material used in its manufacturing processes is suspected to have occurred at its Yokkaichi Plant in Mie prefecture and its Kitakami Plant in Iwate prefecture, partially affecting production …at both plants.
Oddly, Kioxia also stressed that the company’s planar NAND would not be impacted, only its 3D NAND. Given that planar NAND shipments are extremely low these days, it’s peculiar that the company would have even mentioned it in a press release.
These two releases give us two valuable pieces of information:
- Although this is labeled as a contamination issue, it’s unlike most contaminations, where some event like a fire has shut the plant and will require clean-up. If only the material is contaminated, and not the facility, then most of the fix will be achieved by changing sources for the material.
- WDC’s estimate of the shortfall gives us a way to estimate the market impact.
What can we determine from this information?
At first glance, 6.5 exabytes of flash sounds like an awful lot of material. While it’s certainly an important amount, and would sell for over $400 million even at today’s lowest spot market prices, it only accounts for one half of one percent of this year’s estimated total market of 1,260 exabytes.
Still, this will kick today’s slightly-oversupplied market into a shortage, but not to an extreme degree. Big memory chip shortages are in the range of 2%.
For WDC, whose market share is around 18%, this should reduce flash exabyte shipments by about 3.5%. I suspect that Kioxia’s shipments will also be about 3.5% lower this year, but since Kioxia has been selling about 35-40% more flash recently than does WDC, then their shortfall will be larger, or nearly 10 exabytes.
If a shortage develops then prices will rise, and it is quite possible that Kioxia’s and WDC’s shortfalls might translate into a measurable revenue increase. In that case other suppliers would enjoy an even larger revenue boost since their exabyte shipments may not be impacted.
Are Other Suppliers Affected?
I say: “May not” in the prior paragraph because these other suppliers might announce similar problems in days to come. Both WDC and Kioxia have blamed contamination of material. If a chemical supplier is to blame then other suppliers may be using the same chemicals from the same supplier and would also have shortfalls. We will have to wait and see what they will tell us.
On occasion we learn that semiconductor manufacturers come to rely too heavily on a single supplier, and this can lead to enormous issues. Today microprocessor makers like Intel, AMD, and NVIDIA are suffering from a substrate shortage partly due to the fact that Ajinomoto is the sole supplier of certain films used to produce those substrates. An even worse shortage occurred in July 1993 when Sumitomo Chemical had a fire that led to a shortage of the epoxy die attach material that all DRAM makers used. Sumitomo was the only source of this kind of epoxy.
If all NAND flash makers use the same materials and vendor that caused the problems at Flash Ventures then the NAND flash market is likely to be undersupplied by a whopping 3.5% this year, and that would be a very dire shortage compared to anything that happened in the NAND flash market’s history.
Unrelated to Today’s Chip Shortage
For readers outside of the memory chip business I should explain that the semiconductor industry’s current chip shortage doesn’t involve NAND flash at all. It’s a shortage of older technology chips manufactured on 200mm wafers. All NAND and DRAM is produced on 300mm wafers. The semiconductors that are in shortage are mainly linear chips like voltage regulators and power transistors, along with certain MCUs.
NAND Flash Turned 35 Today
One very sad casualty from all of this is that today Kioxia made a big announcement that is getting lost in the shuffle: The 35th birthday of NAND flash technology. The company issued a press release and launched a new 35th anniversary website with special videos and infographics to celebrate this milestone.
There was quite a lot of lead-up to this, and a major effort was put into getting everything just right. In fact, there was going to be a big press reception to celebrate this at CES last month, but it was canceled because of the Omicron spike. When that occurred, the company rescheduled for today. And now this.
I am sure that some readers have had a birthday like that! It’s no fun.
Objective Analysis Has Insights
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