Samsung, NXP, Infineon shut down factories in the US in the cold wave
Renesas production stopped due to earthquake in Japan… Take time to normalize
Shortage of industrial water such as TSMC due to drought in Taiwan
Increasing the burden of global semiconductor supply and demand… Fear of rising prices
[아시아경제 우수연 기자, 정현진 기자]Since the beginning of this year, the global semiconductor industry has been caught up in an unexpected variable called natural disaster. Considering the characteristics of a semiconductor factory that runs 24 hours a day, it is estimated that even after a short-term shutdown, the loss will reach tens of billions of won. As the expectations for the semiconductor supercycle (long-term boom) are growing, semiconductor factories around the world are stopped, and the shortage of semiconductors and resulting price hikes are expected to increase further.
According to the financial statements disclosed by Samsung Electronics on the 19th, it was found that only 10 billion won in daily sales of Samsung Electronics, which shut down its Austin plant in the US due to a recent record cold, was lost. Last year, the Austin plant’s annual sales amounted to KRW 3.91 trillion, and taking this into account, the average daily sales loss from the shutdown is estimated at KRW 10.7 billion.
Due to the power shortage caused by the cold wave, the Samsung Electronics Austin plant has been shut down from 4 pm on the 16th (local time). Austin Energy, an Austin power company, has notified the power supply shutdown period of three days, but the shutdown period may be longer if the time period such as reorganization for operation is considered. This is the first time that a plant has ceased to operate entirely since Samsung Electronics entered the semiconductor business. Even if it is restarted within ten days, it is estimated that the loss will reach tens of billions of won, and if it exceeds ten days, the loss can increase to 100 billion won.
Semiconductor industry stuck in cold wave, earthquake, drought
In Japan, the semiconductor production line stopped due to an earthquake. Japan’s Renesas, the third largest manufacturer of automotive semiconductors, restarted its plant in Ibaraki Prefecture, which was shut down due to a strong earthquake in Fukushima Prefecture, Japan on the 13th. Operation was barely resumed, but the time to recover production capacity before the earthquake is expected to be around the 21st. Japanese companies that manufacture raw materials for semiconductors also temporarily stopped production due to the earthquake. Shin-Etsu Chemical, which produces photoresist, an essential material for semiconductors, shuts down its plant, inspects equipment for damage, and gradually resumes production.
In the U.S., a record cold wave and heavy snowfall led to a shortage of power supply, and local factories have declared a total shutdown. Samsung Electronics, NXP in the Netherlands, and Infineon in Germany eventually shut down. While the cold wave is expected to continue until the weekend, it will take some time for production to resume as preliminary inspections are required for restart. Chris Casso, an analyst at Raymond James, an investment bank in the United States, predicted that “it will not have a big impact under normal circumstances, but in the current situation where there is a serious semiconductor supply shortage across the industry, such a power outage will deteriorate supply and demand.”
In Taiwan, where TSMC plants, which lead the foundry industry, are concentrated, concerns are growing due to drought. According to the Taiwan Media Association Newspaper Network, the water shortage situation in Taiwan becomes serious, and the ratio of industrial water conservation in some areas, such as Hsinchu City, is expected to rise from 7% to 11% from the 25th. In Hsinchu City, which is called Taiwan’s Silicon Valley, TSMC and other IT-related factories and companies are concentrated. The Yonhap Newspaper said, “Concerns about water shortages can affect the production capacity of ICs and panels,” and “this will soon lead to continuous price hikes.” However, TSMC dismissed that the impact of short-term production plans would be insignificant since it has been continuously monitoring the water shortage and has prepared countermeasures.
Concerns about rising semiconductor prices due to supply contraction
Concerns are also raising that the pace of the increase in semiconductor product prices will accelerate as supply disrupts short-term. In the semiconductor market, which has confirmed a rapid increase in demand since the end of last year, expectations for a supercycle have increased for the next two years from this year.
In the spot market, DRAM transaction prices have already exceeded the 4 dollar mark in a short period of time. According to DRAMeXchange, the spot transaction price for PC DRAM (based on DDR4 8Gb) on the 18th (local time) touched $4.10. As the fixed DRAM price rebounded in eight months last month, the spot price, which reflects the market situation first, is also on the rise. In addition, the price of semiconductor material photoresist has recently increased by 10% due to the effect of the factory shutdown, and the industry is predicting the possibility of an additional increase in semiconductor prices due to rising raw material prices.
This is because, due to the nature of the semiconductor industry, which forms a global value chain, if production is stopped in one place, it immediately hits the overall global supply chain. McKinsey & Company mentioned the semiconductor industry as a representative example in last year’s report on the damage to the global supply chain caused by climate change.
The report analyzed that “semiconductors are a key component necessary for all electronic devices, from computers to smartphones and electronic watches, and are concentrated in regions where climate risks are high locally.” He added, “To reduce the damage caused by supply disruptions due to climate change, it is necessary to prepare, such as double outsourcing or expanding the resilience of suppliers.”
Reporter Woo Woo-yeon [email protected]
Reporter Jeong Hyun-jin [email protected]