Samsung Semiconductor Shut Down in Austin
Amid negotiations with a number of cities that are vying for Samsung’s Electronics’ (005930.KS) proposed $17b semiconductor fab, it seems that Samsung was forced to shut down its existing production plant in Austin, Texas due to local power issues caused by the snow storm that is blanketing the country. Negotiations between Austin Power, a community run service that is ostensibly owned by the State of Texas, and the Coalition for Clean, Affordable, Reliable Energy, a group that negotiates on behalf of the city’s largest power consumer, initially ended with a request to customers to conserve power but escalated to power being shut off at those facilities that had back-up generators. The load however was greater than the disabled grid was able to handle, even at the reduced rates and they were asked to fully shut down production.
Samsung says while they were eventually forced to shut down the plant at 1PM yesterday, “With prior notice, appropriate measures have safely been taken for the facilities and wafers in production. We will resume production as soon as power is restored. We are discussing timing with the proper authorities.” That said, Samsung’s semi plant was not the only one in Austin to be shut down as plants for NXP Semiconductor (NXPI), Infineon (IFX.GR), and Skorpios Technologies (pvt) were also affected. As far as we know, the NXP, Infineon, and Skorpios lines were all 8” lines, with small 12” capabilities, while the Samsung plant is a 12” fab. With capabilities down to the 11um node, although much of the fab’s output is at 14nm through 32nm.
While the fabs were shut down more gradually than during a full blackout, we expect the fab to now be in a ‘cold’ mode, where no equipment is kept running. This means while the equipment will be able to turn on again when the power is restored, many tools will have to run a number of trial runs before they can be put back into full production, and the process can take as long as a month to complete, depending on how out of alignment the tools are.
In the case of Samsung’s fab, estimates are that Austin accounts for ~28% of Samsung’s total production capacity, so a full month shutdown would reduce Samsung’s full year output by ~2.34% or 0.3% of global semiconductor sales, which does not sound like a lot, however the specific chips being produced at the fab can make a big difference to global supply A 30 minute shutdown at Samsung’s fab in 2018 destroyed 3% of the world’s supply of NAND chips and a power outage at Samsung’s plant in Hwaseong, Korea plant last month would up taking the company several days to restore power and resume production. Given that the industry is already experiencing chip shortages, any new production reductions can only make things worse overall, and specific items produced in Austin, could lead to some specific parts being in even more short supply.
Samsung says while they were eventually forced to shut down the plant at 1PM yesterday, “With prior notice, appropriate measures have safely been taken for the facilities and wafers in production. We will resume production as soon as power is restored. We are discussing timing with the proper authorities.” That said, Samsung’s semi plant was not the only one in Austin to be shut down as plants for NXP Semiconductor (NXPI), Infineon (IFX.GR), and Skorpios Technologies (pvt) were also affected. As far as we know, the NXP, Infineon, and Skorpios lines were all 8” lines, with small 12” capabilities, while the Samsung plant is a 12” fab. With capabilities down to the 11um node, although much of the fab’s output is at 14nm through 32nm.
While the fabs were shut down more gradually than during a full blackout, we expect the fab to now be in a ‘cold’ mode, where no equipment is kept running. This means while the equipment will be able to turn on again when the power is restored, many tools will have to run a number of trial runs before they can be put back into full production, and the process can take as long as a month to complete, depending on how out of alignment the tools are.
In the case of Samsung’s fab, estimates are that Austin accounts for ~28% of Samsung’s total production capacity, so a full month shutdown would reduce Samsung’s full year output by ~2.34% or 0.3% of global semiconductor sales, which does not sound like a lot, however the specific chips being produced at the fab can make a big difference to global supply A 30 minute shutdown at Samsung’s fab in 2018 destroyed 3% of the world’s supply of NAND chips and a power outage at Samsung’s plant in Hwaseong, Korea plant last month would up taking the company several days to restore power and resume production. Given that the industry is already experiencing chip shortages, any new production reductions can only make things worse overall, and specific items produced in Austin, could lead to some specific parts being in even more short supply.
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