Austin’s Samsung plant is back online after shutting down during Texas winter storms
Samsung’s semiconductor fabrication plant in Austin is once again operational, the company confirmed Tuesday — more than a month after it was shut down due to power outages during February’s Texas freeze, a move that likely cost the technology giant hundreds of millions of dollars.
Samsung Austin Semiconductor “has reached production close to normal levels as of last week,” Samsung spokeswoman Michele Glaze said Tuesday in a written statement to the American-Statesman.
The company declined to be more specific on when the fab resumed operations. Samsung has said for weeks that it was working to resume operations, but that inspecting and reconfiguring the facility would be a time-consuming process.
Samsung did not give an estimate on how much revenue it might have lost in the shutdown, nor did it say if there had been any product loss or damage to the facility. However, industry experts have estimated that the shutdown has cost Samsung hundreds of millions of dollars due to lost product, lost production time and potential equipment damage.
Samsung was one of a number of Austin’s largest industrial power users that was ordered by the city to idle or shut down operations the week of Feb.15, as millions of Texas homes and businesses lost electricity and the state’s power grid came close to a total shutdown.
Samsung and NXP Semiconductors were among the facilities that were shut down.
Both Samsung and NXP Semiconductors had power restored last month, but the fabrication plants remained offline for weeks afterward.
Earlier in March, NXP Semiconductors said its two Austin fabrication facilities were back up and running after being offline for nearly a month. The company estimated it would lose $100 million in revenue and a month of wafer production at the facilities as a result of the shutdown of its Austin chip-making operations. Each batch of wafers — a thin slice of semiconductor — can take 45 to 60 days to make, so any shutdown could mean a loss of weeks of work.
Patrick Moorhead, an industry analyst and founder of Austin-based Moor Insights and Strategy, estimated Tuesday, that the shutdown has likely cost Samsung hundreds of millions. He said shutting down a fab is a complicated process, and the length of the shutdown could signal issues that could range from low efficiency to having to fix a liquid line that froze.
Matt Bryson, an analyst and senior vice president of research for Wedbush Securities, previously estimated that Samsung would losses would amount to hundreds of millions of dollars. He said the longer the fab remained offline, the greater the impact on both the company’s financials and those of its customers as the loss of inventory created a problem with the global semiconductor supply chain.
Ed Latson, executive director of the Austin Regional Manufacturers Association, had previously called the semiconductor shutdowns an “economic disaster for the semiconductor industry in Central Texas.” On Tuesday, he said it was good to see Samsung’s fab running once again, but said it was crucial that this be avoided in the future.
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“Samsung is a critical contributor to address the global semiconductor shortage and the factory in Austin is critical to our economy, so it is very positive they are back up to full strength,” Latson said. “It’s important to remember that the economic loss they suffered due to Austin Energy’s decision to shut them down could have been avoided. We need to ensure that it doesn’t happen again.”
Semiconductor fabs are typically operational 24 hours a day for years on end, and restarting one a is a complicated process that can take up to a week, according to industry experts. Moorhead said it is rarely able to be done without problems.
Austin’s semiconductor facilities produce a notable percentage of the world’s chips. Trade publication ExtremeTech recently estimated that Samsung’s Austin facility produces about 5% of the world’s 300-millimeter wafers in a given month. Bloomberg Intelligence estimated that NXP’s facilities account for about 37% of the company’s total production.
The semiconductor industry was already dealing with slowdowns in production and supply chain issues amid the coronavirus pandemic prior to the February winter storms. The tight supply has led to shortages of a number of products reliant on semiconductor technology, from cars to laptops.
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Moorhead said Samsung’s fab reopening “is an important milestone as the fab provides memory and storage to smartphones, tablets, PCs and cars that are in high demand.”
The shutdowns also came as Samsung considers a significant expansion in Central Texas. Prior to the storm, company officials had confirmed Austin was among a number of locations being considered for a $17 billion state-of-the-art chip factory. The company is also considering locations including New York and Arizona. In Austin, documents filed with the state show the company is seeking more than $1 billion in incentives for the expansion.
Samsung has had operations in Austin since 1997 and estimates it has invested about $17 billion in its Austin campus over the years. It previously said about 10,000 people work at its Austin fabrication plant. Of those, about 3,000 are Samsung employees and the rest are contractors. It also has a research and development facility in Central Texas.