Report: Power outage at Samsung deemed minor, but could affect prices

March 26, 2010 – A brief power outage at Samsung Electronics appears to have caused "minimal" damage and internal impact on memory production, but may briefly inflate prices until markets know for sure, according to multiple reports.

The brief power outage at the company’s site in Gilheung, Gyeonggi Province on Wednesday affected some production lines, but power came back within an hour, according to a company spokesperson quoted by Reuters. Damage is expected to be "minimal," he said, though added that Samsung’s R&D facilities may be more impacted. Dow Jones pegs the financial impact at about 9B won (US $7M), and that Samsung is still determining the cause of the outage. Citing "sources at [Samsung’s] supply chain partners," Digitimes claims the outage impacted the company’s Fab 13 and Fab 14 300mm DRAM and NAND facilities, which have combined monthly capacity of 250,000 wafers/month.

Scanning media reports, most suggest that despite initial uncertainty, the larger impact of the outage should be minimal in terms of DRAM pricing; the Dow Jones report cited Meritz Securities analyst Lee Sun-tae indicating only nonmemory lines were affected. The Korea Times, though, cited concern from another financial analyst (Choi Seung-jae of KTB Investment) noting the supply sensitivity of chip market pricing, so that this shutdown, however brief, "will indirectly affect the prices of DRAM and NAND flash chips, which we expect will see an additional rise."

This outage invokes memories of a more serious problem Samsung suffered in August 2007, when a severe blackout knocked out six lines at its K2 production line, ultimately denting NAND flash output by about 10% and costing the company tens of billions of won.


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