Supply Chain News Bites - Only from SCDigest

-August 6, 2007


Supply Chain Disruptions: Samsung Flash Memory Plant Goes Down, Halting Production for Almost Two Days


The $43 Million Spark; Apple Stock Also Drops on Supply Fears


By SCDigest Editorial Staff


Electronics giant Samsung’s important NAND Flash memory chip factory in South Korea was shut down for almost two days Friday and Saturday, after an electrical issue caused a power outage there.

The exact cause of the problem isn’t clear, but reports are that a spark in a transformer caused power to be lost near Samsung's huge chip manufacturing complex in South Korea. Samsung is the world’s largest manufacturing of DRAM (dynamic RAM) memory chips, which are used mainly in PCs, and NAND flash memory chips, which are used in portable devices, such as Apple’s IPOD.

In fact, as news of the problem reached the financial markets, Apple’s stock fell more than 3%, in part, it appears, over fears a shortage of available NAND memory chips would cause supply shortages of Apple’s iPOD and iPhone products available for sale.

Samsung originally said the plant would be down for two days, but reported it was up by mid-day on Saturday, a bit earlier than originally expected. The plant has six NAND memory production lines, which the company said all were back in action.

Samsung now estimates the cost of the disruption at about $43 million, though it says total chip production for the third quarter will not be impacted. The company did not specify how it would catch up for the lost volume.

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