Toshiba Memory and Western Digital on Friday disclosed that an unexpected power outage in the Yokkaichi province in Japan on June 15 affected the manufacturing facilities that are jointly operated. Right now, production facilities are partially halted and they are expected to resume operations only by mid-July.

Western Digital says that the 13-minute power outage impacted wafers that were processed, the facilities, and production equipment. The company indicates that the incident will reduce its NAND flash wafer supply in Q3 by approximately 6 EB (exabytes), which is believed to be about a half of the company’s quarterly supply of NAND. Toshiba does not disclose the impact the outage will have on its NAND wafer supply in the coming months, but confirms that the fabs are partially suspended at the moment. Keeping in mind that Toshiba generally uses more capacity of the fabs than WD, the impact on its supply could be significantly higher than 6 EB with some estimating that it could be as high as ~9 EB.

Both companies are assessing the damage at the moment, so the financial harm of the incident is unclear. Not even counting potential damage to production tools and other equipment used at the fabs, 6 EB of NAND cost a lot of money. Furthermore, analysts from TrendForce believe that a consequence of the outage will be some loss of confidence from clients of both companies, which will have a financial impact as well.

The Yokkaichi Operations campus jointly owned and run by Toshiba and Western Digital produces about 35% of the global NAND output in terms of revenue, according to TrendForce. At present, the manufacturing base has five production facilities (Fab 2, Fab 3, Fab 4, Fab 5, and Fab 6) as well as an R&D center, all of which were affected by the outage. Three fabs within the campus produce 3D NAND flash, whereas another two are used to make special-purpose types of memory.

Considering the gargantuan size of the Yokkaichi Operations, disruptions of its supply will inevitably have an effect on 2D NAND and 3D NAND spot prices in the short-term future. Nonetheless, since contract prices have already been set for Q3 (and possibly Q4), they are not going to change. Meanwhile, it remains to be seen whether large customers will have to go shopping in Q3 or Q4 and affect prices on the spot markets further.

Considering that the Yokkaichi Operations produces at least 1/3 of the global NAND flash output (let’s assume that dollar share more or less corresponds to bit share) and half of its production for the quarter was lost because of the incident, this means that the industry will miss approximately 1/6 (or 16.5%) of the global NAND supply in Q3. Whether or not this will create a deficit on the market that will cause significant price hikes depends on multiple factors and is something that remains to be seen.  

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Sources: Western Digital, Reuters, TrendForce, Blocks & Files

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  • Alistair - Friday, June 28, 2019 - link

    Wow, yeap sounds like they should invest in a Tesla battery storage system ;)
  • Bravadu - Friday, June 28, 2019 - link

    6EB sounds like a lot, but in the bigger picture it's not that much. You can get a 1TB Sabrent or Inland Phison E12 for $100, and that's retail pricing with dram, controller, etc. Meaning that 6EB is at most $6 million.

    In contrast TSMC took a $550 million hit a few months ago from a defective chemical making Nvidia and Huawei chips go bad.
  • Kristian Vättö - Friday, June 28, 2019 - link

    6 exabytes = 6 billion gigabytes
    At $0.10/GB, that means $600M
  • wishgranter - Friday, June 28, 2019 - link

    that is the final retail price, we talking about manufacturing price of just wafers, not controller and etc.. So expect price in $0.02 - $0.03 /GBit
  • azfacea - Friday, June 28, 2019 - link

    600 mil is correct. if you think nand chips are 20-30% of ssd prices you don't have a clue.
  • FullmetalTitan - Friday, June 28, 2019 - link

    Literally every one of your comments here has been wrong, so maybe don't call out other people
  • azfacea - Friday, June 28, 2019 - link

    last time i am gonna shit on you. after this get lost.

    wholesale price for 3D TLC 256Gb ==== 3.1 USD

    256 Gb = 32 GB
    32GB ~= 3.2 USD ==>> price per GB 0.10 cents.

    Got shat on by enough?
  • purerice - Friday, June 28, 2019 - link

    @azfacea, it's comments like yours why I rarely bother posting. You're better than that, aren't you? 6 comments in 1 article first attacks the victim of circumstances in the article and the next 5 attack other people's comments. Sorry if your home life is harsh but please don't take it out on us. Give it to a therapist instead.
  • MarcusMo - Saturday, June 29, 2019 - link

    Agreed, the AnandTech readership is in a tailspin. I don’t understand why you cannot simply implement upvote/downvote buttons to get rid of abusive posts like his? Or at the very least get some moderators. This community is dying.
  • Threska - Saturday, June 29, 2019 - link

    Moderators would be better. Up/Down gets used too much as agree/disagree rather than merit..e.g Reddit.

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