As if the chip shortage wasn't enough of a problem, the supply chain has added a new concern. Western Digital and Kioxia suffered chemical contamination at their factories in Japan, which has interrupted the manufacture of 3D NAND chips.
This has resulted in both companies losing production capacity estimated at 6.5 exabytes; and it is already estimated that the disruption will cause price increases in products such as solid state drives (SSD) and DRAM memories.
According to The Registrar, Kioxia confirmed the event in late January, and Western Digital later ratified it. According to the companies, only the production of 3D NAND chips has been affected; 2D NAND manufacturing has continued as normal.
So far, it has only been reported that one of the chemicals used to produce the chips in question was found to be contaminated. It has not yet been made public what the affected substance was nor who supplied it to both companies. What has been mentioned is that the interruption in the production process has occurred in the two locations where the firms share their factories: Yokkaichi and Kitakami. In any case, between both sites there are seven installed factories and it has not been specified if they are all under the same circumstances.
Undoubtedly, this new situation will bring more stress to a supply chain that has already suffered a strong impact from the semiconductor crisis. The aforementioned report cites that the demand for NAND chips was 160 exabytes during the last quarter, and that as at least 10% of the demand for 3D NAND cannot be met, it is very likely that the situation will lead to a rapid increase in prices.
In the case of SSDs, this incident could lead to a price increase of between 5% and 10% during the second quarter of 2022.
A new problem for the production of 3D NAND chips
The chemical contamination registered in the Western Digital and Kioxia factories is not the only problem registered in the 3D NAND chip sector in recent times. At the end of 2021, Samsung was forced to stop the production of these components in two of its factories in China. This was due to an outbreak of COVID-19 that ended in a lockdown in the city of Xi'an.
It is worth noting that in these facilities, Samsung produces more than 40% of its 3D NAND chips. And although it seemed like an isolated event, what has now happened in Japan has renewed the uncertainty about the fulfillment of the existing demand.
The Register also indicates that, in the case of Kioxia and Western Digital, the loss of production capacity could be well above the mentioned 6.5 exabytes. This is because not only the containers used to store the contaminated chemical will need to be cleaned, but also the pipelines for its distribution and the machines with which the 3D NAND chips are produced. Thus, it is still difficult to know when the companies will recover their normal production level.
