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| A Samsung flag is seen at the company's headquarters in southern Seoul. Yonhap |
Korean tech giant expects better semiconductor earnings in Q2
By Kim Bo-eun
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Samsung Electronics said Thursday that it incurred 400 billion won ($360 million) in losses from the temporary shutdown of its fabrication plant (fab) in Austin, Texas, earlier this year due to freezing weather conditions and power outages.
An unseasonal snowstorm and cold snap hit Texas in February, causing power and water outages that forced the state government to order semiconductor manufacturers there to halt operations at their plants. Samsung said the Austin factory was now fully normalized, achieving a 90 percent production level, March 31.
"There were wafer production disruptions due to the stopping of the fab. About 71,000 wafers were affected and this corresponds to around 300 to 400 billion won in damages," Vice President Han Seung-hoon said in a conference call on the company's first quarter earnings.
He said Samsung was in talks with the local government and utility firms there to prevent such disruptions from recurring. The shutdown of the plants in Austin exacerbated the ongoing global shortage of semiconductors.
"Due to the global semiconductor shortage, we are also experiencing some effects, especially around certain set products, and display production. We are approaching this from multiple angles to minimize the impact," Executive Vice President Ben Suh said.
"We are also a semiconductor supplier and so to respond to the current situation we are focusing on maximizing the efficiency of our current capacity in foundries. We will also be actively responding to customer demand by expanding our capacity around cutting-edge processes once the Pyeongtaek No.2 Line enters full-scale operation in the second half," he added.
Samsung projected semiconductor earnings would improve in the second quarter.
"Looking toward the second quarter, we expect to see strong demand across all applications. We are expecting our results to significantly improve in the second quarter," Han said.
"What we are planning in terms of mass production in the second half is DRAM chips using 14-nanometer (nm) processing technology, which has successfully completed its evaluation by clients," Han said.
"Whereas the 15-nano process used EUV on a single layer the 14-nm will be using EUV on multiple layers. This demonstrates our technology leadership in terms of utilizing EUV ecosystems in a differentiated manner." A nanometer is one billionth of a meter and in the semiconductor industry is the length of a transistor gate ― the smaller the gate the greater the processing power.
In addition, Samsung, which is also the world's top smartphone vendor, told investors it will seek to popularize its foldable phones, which currently only account for a small portion of sales.
"The focus for the Z-fold this year would be to emphasize its large screen, differentiated experience, entertainment and productivity to put the Z-fold in a premium position," Vice President Kim Sung-koo told investors during the call. "For the Z-flip we are going to emphasize its stylish design as well as improve usability to appeal to millennials as well as our female user base."
Samsung said it will pay 361 won per share for both common and preferred stock in a quarterly dividend, amounting to 2.45 trillion won. This is a quarter of the 9.8 trillion won annually that Samsung promised in January to pay out in dividends over the next three years.
Samsung Electronics' operating profit jumped 45.5 percent year-on-year to 9.38 trillion won in the first quarter, on record sales of 65.38 trillion won, up 18.2 percent.
