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Samsung sent engineers to Texas to quickly restore production


The world is experiencing an unprecedented shortage of microchips needed for a wide range of everyday devices – from game consoles, smartphones, tablets and home appliances to televisions, as well as cars, which are increasingly electrified and “smarter”.

Yonhap

The current chip shortage appears to be a consequence of numerous global problems, including the protracted trade war between the United States and China, quarantine measures against COVID-19, and natural disasters in regions with large semiconductor manufacturing facilities.

Last week, nearly a hundred Samsung Electronics engineers and its semiconductor contractors flew to Austin, Texas to help relaunch the company’s chip production, which was halted Tuesday due to state power outages.

In addition to the South Korean chip maker, a number of industrial enterprises, including the Dutch NXP and the German Infineon, were also forced to stop production in Texas due to an emergency power outage caused by abnormal cold for the region.

Samsung’s Austin plant produced $ 3.54 billion worth of chips for US customers last year. Average daily sales are now estimated at about $ 9 million. Since Samsung completely shut down its chip factory for the first time due to a power outage, the Korean company had to send its employees to study the impact of the situation on the equipment and then restart all work. Samsung said this is an unprecedented case among all of its semiconductor factories.

Samsung plant in Austin, Texas

Samsung plant in Austin, Texas

Austin’s energy company, Austin Energy, initially notified Samsung that the power would be off for three days, but so far, the Korean manufacturer has not been informed about the power-up time. Considering that it will take several days to completely restart semiconductor manufacturing, Samsung’s plant could return to normal operation next week. If the enterprise does not function normally for 10 days, this can lead to losses in the amount of about $ 90 million.

The temporary shutdown of large chip mills in Texas is expected to exacerbate the current already acute chip shortage in the auto industry. Since the end of January, global automakers have scaled back or suspended production of a number of models as they faced a shortage of electronic components needed for cars: sensors, microprocessors for infotainment systems and communication chips.

Factories ramped up their supply of chips to electronics manufacturers last year as demand for gadgets skyrocketed due to the demand for contactless services like telemedicine or distance learning amid the pandemic. This was done at times to the detriment of industries like car manufacturing – the margin in the electronics sector is simply higher.

Samsung plant in Austin, Texas

Samsung plant in Austin, Texas

Another example of a natural disaster aggravating the global chip shortage was the Fukushima earthquake, which forced Renesas Electronics to completely shut down operations from February 13-16. Although the Japanese chipmaker should have resumed production by now, it will take some time to get back to full capacity.

Taiwanese TSMC, the absolute leader in the global contract manufacturing market, risks facing production problems due to government demands to reduce industrial water use.

Finally, one of the reasons for the current chip shortage, according to some analysts, is the forced accumulation of reserves by the Chinese company Huawei. Last year, even before US trade sanctions came into effect, the Chinese tech giant bought large quantities of chips from companies like Samsung and SK Hynix.

Taken together, a variety of factors have led to the current deficit, which affects literally every industry that requires modern chips: cars, smartphones, game consoles, tablets, laptops, and so on. Analysts believe that the shortage of chips for gadgets and cars will persist throughout 2021 and lead to higher prices.

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