Fabrication plants jointly run by Kioxia and Western Digital accidentally used a contaminated chemical to manufacture 3D NAND non-volatile flash memory.
The issue impacted at least 6.5 exabytes of NAND supply, and potentially as much as 16 exabytes - a significant proportion of global supplies.
The two companies operate six fabs in Japan in Yokkaichi, Mie prefecture, and Kitakami, Iwate prefecture. All of the fabs used the unidentified chemical from an unknown supplier, contaminating production. Measures are underway to restore production.
"Western Digital's current assessment of the impact is a reduction of its flash availability of at least 6.5 exabytes," the company said in a statement. That would represent more than a quarter of the NAND it sold in the fourth quarter.
But Western Digital only takes about 40 percent of the fabs' output, Wells Fargo analyst Aaron Rakers noted. Assuming the same loss ratio for Kioxia, this could mean 16 exabytes was lost in total.
We also don't know how long remediation efforts will take, and whether production lines need to be shut down so that systems and pipes can be cleaned. This could further impact supply. The two companies are responsible for around a third of global NAND flash supplies.
Fortunately, prior to the accident, the NAND flash market was set to be slightly oversupplied. "The impact of WDC's material contamination issue is significant and Samsung's experience during the previous lockdown of Xi'an due to the pandemic has also retarded the magnitude of the NAND flash price slump," analyst firm TrendForce said.
The company added: "The consequences of this latest incident may push the price of NAND Flash in Q2 to spike 5~10 percent."
2D NAND manufacturing was not affected by the incident.
A number of black swan events have hit fabs over the past few years, which has been particularly painful for chip factories working to alleviate the ongoing global semiconductor shortage.
Among them: A storm in Texas took out Samsung, NXP, and Infineon fabs; a fire devastated Japan's Renesas fab (as did another at ASML's facility in Germany); power cuts and droughts in Taiwan hit TSMC in Taiwan; a wayward balloon caused a fab to shut in Germany, while this year saw earthquakes bring down two Toshiba chip fabs in Japan.
