Chinese Factory Fire Could Impact Prices of Electronic Medical Devices

Due to a massive fire in a Chinese factory, the price of electronic medical devices could rise over the next few months. The factory, located in Wuxi, China, manufactures a significant portion of the world's memory chips. These chips are used in smart phones, computers, tablets, biometric medical devices, electronic health monitoring devices, hospital equipment and more.

The factory in question is owned by SK Hynix, a Korean manufacturing firm. Following the fire, prices of 2-gigabyte Dynamic Random Access Memory (DRAM) shot up by 19%. This comes on top of already-inflated DRAM prices due to high demand from Chinese smartphone and tablet manufacturers.

According to TrendForce, a market research firm, it will take SK Hynix at least six months to rebuild its facility. This will lead to higher DRAM prices throughout the fourth quarter of this year. Larger SK Hynix customers include Sony, Dell, Lenovo and Apple. In total, SK Hynix holds approximately one-third of the DRAM market. This compares to 28% and 38% for Micron and Samsung, respectively.

In total, half of SK Hynix's DRAM chips are manufactured at this Chinese facility. This represents approximately one-tenth of the global supply.

For its part, the company has stated the damage isn't severe. "We expect to resume operations in a short time period so overall production and supply volume would not be materially affected," noted a spokesperson. That being said, medical device manufacturers that utilize DRAM chips could see price hikes and increases in supply chain costs in the coming months.