Print 30 comment(s) - last by porkpie.. on Aug 15 at 7:33 AM

Samsung memory factory mishap sends market spinning

On Friday, a power cut at a Samsung Electronics plant near Seoul forced the South Korean memory giant to shut down six of its chip production lines. The outage sparked expectations of decreases in memory supply and higher prices.

A Samsung spokeswoman explained to Reuters that a problem in the afternoon at the switchboard at a transformer substation led to a power shortage. The company’s advanced NAND flash memory lines was one of the lines affected by power issue.

Shares of competing memory makers Toshiba and Hynix gained on the market following the expectations of higher memory prices, while shares of Samsung dipped slightly. Shares major NAND flash memory clients, such as Apple for its use of flash in its iPod music players, also fell on expectations of higher NAND costs.

Although Samsung told the press that it could take up to two days to resume normal operations, the company was able to reach full operation around noon Saturday – making actual damage and losses of the power outage less than originally anticipated. The company now expects to lose 40 billion won ($43.4 million) from the outage.

"Some of the wafers that were being processed when the outage hit can be salvaged, and the potential yield from the recovered wafers was at a good level," said Choi Chang-sik, executive vice president at Samsung's semiconductor division, at a news conference in Kiheung.

In response to last week’s mishap, Samsung said today that it plans to increase production to help make up for lost ground. The company added that it would try to meet its monthly targets in spite of the downtime.

"Regarding any concerns about the lingering impact of this accident, our third-quarter results will show ... we'll do our best to outperform the market's expectation," said Hwang Chang-gyu, the president of Samsung's semiconductor business.

Samsung’s plan of increasing NAND production may have a negative effect on the memory maker’s other product lines. Tom Duong, vice president of business development at Mushkin, believes that Samsung may have to cut back on its DRAM production in order to make up for losses on NAND.

“From my understanding, the lines that are affected are the lines that produce NAND flash. So to subsidize, Samsung will probably have to switch some of their DRAM line to make up for the loss of NAND production,” Duong told DailyTech. “Thus, it will hamper supply of DRAM thus causing an increase in prices.”

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RE: An "accident"
By KristopherKubicki on 8/6/2007 7:11:08 PM , Rating: 5
Considering the number of open lawsuits against these guys for price fixing (on both ends), predatory pricing, collusion, kickbacks, options fraud, backdating, predatory takeovers --- couldn't have happened to a nicer bunch of guys ;)

RE: An "accident"
By Samus on 8/6/2007 7:35:17 PM , Rating: 1

RE: An "accident"
By Christopher1 on 8/6/2007 11:19:05 PM , Rating: 1
With all due respect guys, while the NAND makers are kinda in the category of slime...... this could have happened to anyone. I am also sure that there were some inspectors sent out there to make sure that the power outage was actually an accident.

We had one of these accidents in our country recently, the old USA. If it can happen here, I can believe it would happen in a second-world country.

RE: An "accident"
By masher2 on 8/7/2007 12:09:35 AM , Rating: 4
I quote you Hanlon's Law, which says, "never attribute to malice that which can be explained by sheer stupidity."

RE: An "accident"
By JackBeQuick on 8/7/2007 1:35:15 AM , Rating: 2
It's not a Law! It's a Razor!!!!

RE: An "accident"
By Shadowmaster625 on 8/9/2007 9:52:56 AM , Rating: 2
What Hanlon failed to realize is that malice is an even more common element of human nature than stupidity.

Most of the time, we dont do stupid things because we're stupid. We do them for other reasons, such as malice.

RE: An "accident"
By tim851 on 8/7/2007 6:45:37 AM , Rating: 4
If it can happen here, I can believe it would happen in a second-world country.

South Korea is not a second-world country...

RE: An "accident"
By JeffDM on 8/8/2007 7:18:49 PM , Rating: 2
Actually, you are correct, but "first world" "third world" are outdated and not useful terms. "First world" was more or less the US and its allies, "second world" was the Soviet Union and its allies, and "third world" were the unallied countries. I think that would make South Korea a first world nation. I think it somehow had become some connotation of relative affluence, there's some amount of truth to it but it's not quite right.

RE: An "accident"
By porkpie on 8/15/2007 7:33:41 AM , Rating: 2
The politically correct terms now are "developed" and "developing" nations.

RE: An "accident"
By FITCamaro on 8/7/2007 8:09:09 AM , Rating: 2
I worked out at NASA for a summer in college and even there we lost power a few times.

Good old FPL. Known locally as Florida Flicker n Flash.

"If a man really wants to make a million dollars, the best way would be to start his own religion." -- Scientology founder L. Ron. Hubbard

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