Texas has experienced all-time cold spell since 1889. The U.S. Federal Government has declared Texas a national disaster zone.
Because of frigid weather, factories of Korean companies also halted their production one after another.
Samsung's Texas Austin plant was no exception. There is news that the Korean headquarters dispatched technical personnel.
Semiconductor plants are known to run 24/7/365 for production to recoup investment. If the plant stops, it will incur considerable amount of losses due to the yield in pre-processing until the operation resumes at normal level.
Samsung remains calm, however the company is losing 10 billion won a day in the aftermath of the factory shutdown.
This makes me wonder about the logic of investments plan in Austin.
Even considering that 'America First' sentiment is getting intensified to protect American economy, is it really necessary to build a state-of-the-art semiconductor foundry in Austin? (please refer to 2020.11.19 [단독] 삼성전자, 미 오스틴에 EUV전용 시스템LSI 생산능력 70K 신공장 100억불 투자 확정 기사)
Semiconductors are expensive, but they are optimized for air freight, the fastest deliveries in supply chain. So, they can be manufactured anywhere and delivered anywhere in the world within a day.
Let's dig in deeper on this topic. Accumulation of the snowfall in Austin was up to 150mm and the temperature below zero only continued for 6 straight days. It is really ridiculous call it as one of the coldest winter ever in Korean standards.
Due to the cold weather and record level snow fall, many cars are immobilized and there is a shortage of electricity. Since there are not enough snow plow trucks, the roads were not cleared for days. It's an unimaginable level of administrative power and electricity situation from Korean's perspective.
In addition to shortage of electricity, supply of water, an essential component in semiconductor production, was interrupted. There are ample list of deficiencies to define Austin unsuitable to build a semiconductor plant.
Under these circumstances, Samsung is moving forward with the plan of investing $ 10 billion to build a high-tech semiconductor plant. In my opinion, this is not a logical decision.
Samsung Electronics is adamant about the plan. Per senior officials at Samsung who are well-versed in internal affairs, they are not even considering about the withdrawal plan.
There has been a reasonable doubt that the Austin EUV plant was a preemptive move to influence the trial of Vice Chairman Lee Jae-yong.
It is known that the Austin EUV plant plan is cruising thus far. However, contrary to the rumor, Chairman Lee Jae Yong was sentenced jail-time by a higher court last January.
At this point, some may be argued that it is difficult to withdraw from the inter-state commitment. However, that is a matter between the Korean government and the US government. Samsung is not obligated to be responsible for the consequence.
Let's approach this topic from shareholder value. Building a state of art foundry and system semiconductor factory in the area where may force production to stop due to electricity and water cut-off is tantamount to breach of duty. In turn, it is needless to say that such action will adversely affect shareholder value.
Looking at the aforementioned list, there are ample reason for withdrawing the plan to build an Austin EUV plant. In particular, Samsung Electronics should quickly announce to scrap the plan in order to quell the rumors that the company was trying to leverage the Austin EUV plant plan to influence the Chairman Lee Jae-yong's trial.
Vice Chairman Lee Jae-yong was the final approver of the plan. Since Vice Chairman Lee is absent, Samsung Electronics Vice Chairman Kim Ki-nam, who is an acting leader, should take the post and make a decision.
If Vice Chairman Kim can't do it on his own, he should visit incarcerated Vice Chairman Lee to get his approval.
The request from Texas state government for the plant shutdown is an administrative abuse and this can happen again. The unexpected situation may be occurred by not the weather but the U.S. government regulatory action. That is the American way.
Reporter Lee Ji-sun email@example.com