Samsung Reports $270M Loss After Texas Plant Shutdown, Affected by Global Chip Shortage

Sophie Webster, Tech Times 29 April 2021, 10:04 am

Samsung has lost more than 300 billion won or around $270 million after it shut down its semiconductor plant in Austin, Texas.

Speaking at a conference call, senior vice president at Samsung's foundry business Han Seung-hoon said that the shutdown affected more than 71,000 wafers, which resulted to 300 to 400 billion won in damage.

Samsung's $270 Million Loss

According to Yonhap News, the statement made by Han Seung-hoon coincided with Samsung's latest earnings release, in which it reported strong sales of its smartphones and other consumer electronics.

The South Korean tech giant was forced to shut down its Austin, Texas plant, which produces microprocessors such as solid state drive controllers and radio frequency integrated circuits, back in February after a storm left some 200,000 Austin homes without power.

Also Read: Intel Takes Advantage of AMD Chip Shortage, Cuts 10th-Gen Comet Lake Prices

The shutdown lasted for a month, which is the longest Samsung has ever had to halt production at a factory. But the company says that the plant was back up to 90% production at the end of March, and it is now up to its normal levels.

According to The Financial Times, Samsung profits had exceeded expectations. The net profit for the quarter was up 46% to 7.1 trillion won or around $6.4 billion compared to the same quarter in 2020, resulting in the company's highest first quarter profit since 2018.

The increase was driven by a 66% surge in profits at its mobile division, according to a report by CNBC.

Samsung stated that the sales of its well received flagship Galaxy S21 series have increased together with the more price competitive midrange models.

Samsung's own manufacturing issues have been partly due to the global chip shortage that has affected everything in the tech industry, from graphics cards, cars, cellphones to toasters.

Samsung says that the supply issues have had devastating effects on its business and it contributed to a sudden drop in sales for mobile displays in the first three months of 2021.

The company says it is possible that supply issues will continue into the second half of the year, but that its strengthening cooperation with the in-house foundry and expanding the use of outsourced foundries to compensate.

Samsung thinks its business will benefit from economic recoveries and stimulus programs around the world. It expects strong demand for everything, from servers, to storage, smartphones, and PCs in the second half of the year.

However, it specifically said that demand for TVs could drop in the same time period, as people start to go back to their normal lives.

Global chip shortage

Bloomberg has reported that the global chip shortage is reaching crisis levels.

Ford cancelled shifts at two car plants and said profits could be hit by up to $2.5 billion this year due to chip shortages, while Nissan is idling output at plants in Mexico and the US. General Motors stated it could face a $2 billion profit hit this year.

Last month, Sony, along with other console makers, has struggled with stock shortages over the last year, and said it might not hit sales targets for the new PS5 this year because of the semiconductor supply issue.

Microsoft's Xbox has said it forecasts supply issues continuing at least until the second half of 2021.