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Samsung plant accident sparks fears of ripple effect

Posted: 07 Aug 2007 ?? ?Print Version ?Bookmark and Share

Keywords:Samsung plant accident? flash shortage fears? power disruption?

A problematic switchboard at a transformer substation had cut power flow at a Samsung Electronics Co. Ltd plant near Seoul, prompting the South Korean chip giant to shut down six of its production lines Friday afternoon.

The affected lines at Samsung's Kiheung plant were those that produced most of the world's supply of DRAM and NAND flash chips, triggering fears of a ripple effect across the industry.

A Reuters report cited iSuppli Corp.'s prediction that the incident will likely extend the NAND market shortage to the first half of this month, as the affected lines accounted for 35 percent of global NAND wafer output. Samsung had a 44 percent share of the global NAND market in Q1 this year.

Other analysts had speculated that the disruption could wipe out as much as a month's worth of production of NAND flash chips, which are used for data storage in portable electronics. Samsung supplies NAND flash memory chips to Apple Inc. for use in the iPhone and the iPod. Apple shares fell Friday shortly after news of the plant accident came out.

Samsung shares closed flat Friday, while those of its rivals Toshiba Corp., Hynix Semiconductor Inc., Micron Technology Inc. and Sandisk Corp. rose on expectations of higher prices, according to Reuters.

Samsung expects to accrue losses of up $43.4 million from the power outage that lasted less than 24hrs.

- Christine Telesforo
EE Times-Asia

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