[넘버스]Why Samsung Electronics’ enemy is’disaster’ | Bloter.net

Let’s interpret business, economy and technology with numbers. Numbers are a source of information. Information is open to anyone, and numbers can be seen by anyone, but not everyone has an eye to see the truth behind it. A story of numbers so that everyone can relate <넘버스>I’ll try to solve it easily.

Samsung Electronics held a general shareholders’ meeting on March 17th. About 900 shareholders attended and made various speeches. Among them, questions related to the phenomenon that semiconductor supply is significantly short of demand, so-called’semiconductor shortage’, were also raised.

On that day, Dong-jin Ko, head of the IT mobile (IM) division of Samsung Electronics said, “The unbalance (imbalance) between supply and demand in semiconductors and parts is serious. It is expected that there will be an impact on production from the second quarter of this coming,” he said. “To solve the situation, employees at overseas business sites are making enterprise-wide efforts.”

The recent semiconductor shortage phenomenon has become a negative factor for Samsung Electronics because of a disaster. The operation of Samsung Electronics’ Austin plant has been shut down due to a cold wave in Texas since February, and in the aftermath, production of various products has been disrupted, offsetting the semiconductor’supercycle’.

Let’s look back on the phenomenon of’semiconductor shortage’ that has occurred since the second half of last year. It started with a disaster called Corona 19. Automakers, which predicted a decline in vehicle sales, reduced their orders for automotive semiconductors. As the economy recovered in the second half of the year, vehicle sales exploded, and semiconductor foundry companies already turned wafers for other uses, creating a supply-demand imbalance in automotive semiconductors.

Taiwan is the world’s largest producer of automotive semiconductors. According to IHS Markit, Taiwanese foundry semiconductor company TSMC has received orders from Renesas Electronics, NXP Semiconductors, Infineon, and Texas Instruments (TI) to provide secondary semiconductors ranging from 16nm (nanometers) to 28nm, 40/45nm, 65nm and 110/130nm. It is produced throughout. However, it is said that it takes about two months longer than average to take an order and deliver the product (lead time).

Kwon Kwon-yeon, the Detroit Trade Officer of the United States, said in a report on the’Global Automotive Semiconductor Shortage, Current Status and Prospects’, “Because the lead times of almost all chips have been extended by one to two months due to supply shortages, experts believe that the shortage of automotive semiconductors will occur in 2021. It is expected that it will continue until the quarter,” he said. “Some analysts say that large foundry companies such as TSMC will not accept additional orders before the third quarter of 2021.”

As demand increases and semiconductor prices rise, semiconductor companies would be happy, but Samsung Electronics’ situation is a little different. This is because the operation of the Austin, Texas plant was shut down due to the worst cold wave in Texas in the history of the United States.

Since February 17th, the cold wave that struck Texas has cut power and water supplies. Even in the cold winter, the residents couldn’t use the heater at all, the electricity was barely circulating for a few days, and the lights couldn’t be turned on. When the plumbing was broken and no water came out, the residents reached the point of getting rations or melting snow to eat for drinking water.

The Texas-based plant was no exception. This includes Samsung Electronics’ Austin plant, NXP, and Infineon, the number one in the automotive microcontroller unit (MCU) industry. Electricity, which had been cut off, was supplied quickly, but the operation of the plant continued to be delayed as water as important as electricity in the semiconductor process was not supplied.

The water used by Samsung Electronics’ factory is astronomical. It is said that in 2019, the Hwaseong plant alone spent 49.1 million tons per year. In short, without water, you can’t make a semiconductor at all.

Let’s narrow our view to the Samsung Electronics Austin plant. The Austin Plant, one of Samsung Electronics’ seven foundries, is a foundry that makes semiconductors of 10 nanometers or higher, and is said to handle 100,000 pieces of 300 mm (12 inch) wafers per month. Here, the company produces not only semiconductor products necessary for the company, but also products from customers such as Intel, Qualcomm, Tesla, and Renesas. We make RFICs for mobile communication, motherboards, chipsets for communication, NAND flash, controller chipsets for SSDs, and MCUs for automobiles.

How big is the impact of a factory shutdown? According to the disclosure of Samsung Electronics, the Austin plant achieved sales of KRW 3.91 trillion and net income of KRW 92 billion in 2020. Since the total sales of Samsung Electronics foundry during this period was KRW 17,3136 billion, the Austin plant is a large place, accounting for 22.6% of the foundry.

It is difficult to predict the decrease in sales that will result from the shutdown of the plant, but compared to the previous year’s sales, the decrease in sales per day is 10.7 billion won, which is 326 billion won per month. There are reports that the plant has just resumed operation, but it is said that it is not fully operational yet. The amount of damage may vary depending on the operation of the plant in the future.

In addition, the losses can be even greater if wafers are discarded due to a factory shutdown. Through the report, Yuanta Securities predicted that the’wafer out’, which will finally produce semiconductors, is in mid-April and the loss of wafers is 400 billion won.

The decline in the performance of the Austin plant is also a problem, but this situation is having a series of effects on the production of various products at Samsung Electronics. This is because the production of our own NAND flash and SSD controller chipset that was made at the Austin factory is disrupted. It has become difficult to supply the necessary parts as much as you want.

As the production of this product is delayed, it is affecting the production of storage devices (UFS) to be mounted on our smartphones as well as corporate SSDs that must be supplied to other companies. This is why, at Samsung Electronics, CEO Dong-jin Ko, the head of the IM division in charge of mobile, explained the impact of Shortage at the general shareholders’ meeting.

As a result of this, it is said that’Samsung Electronics is more likely to be afraid of natural disasters than its competitors’. Corona 19 was the biggest factor in reducing Samsung Electronics sales in the first half of last year. In addition, the irresistible risk of factory shutdown due to cold wave is a major factor in not fully benefiting from the recent semiconductor’supercycle’.

And these variables aren’t just a problem for Samsung Electronics. This is because climate change is gradually accelerating and disasters that companies cannot cope with. Companies are fighting wars, not wars every day, against the’wall of disasters’ that cannot be easily overcome with technology.