Austin chip plant halt spells trouble for Samsung and Apple phones

The prolonged suspension of Samsung’s chip plant in Austin due to power shortage caused by freeze is increasing the possibility that smartphone production of the Korean company and Apple maybe negatively affected from the fallout.

The chip plant in Texas manufacturers chips for the world’s two largest smartphone makers.

It manufactures chips used in flagship smartphones Samsung sells in the Americas. It also manufacturers display driver IC for organic light emitting diode (OLED) panels used by Apple for its iPhones.

The Austin plant has production capacity of 20,000 wafers per month.

Samsung conventionally stocks up a month and a half worth of components, so the suspension of the factory won’t affect the company yet. The Austin plant stopped production around two weeks ago.

However, if it takes too long for the plant to restart operations, it may eventually affect production of smartphones. People familiar with the matter told TheElec that it will likely take around two months for the plant to start production normally again. This means Samsung will have until mid-April to normalize production for it to not affect its smartphone production.

Sources within Samsung’s smartphone supply chain told TheElec that the Korean tech giant is expected to ship around 30 million units of Galaxy S21 series, based on the orders it placed to them for the models. This is 15% higher than its predecessor Galaxy S20.

But if Austin plant’s operation is delayed, this could be lowered to late-20 million units for the S21, they said.

Procuring components for its smartphones is a delicate subject for Samsung. It has previously lost the chance to sell more Galaxy S20 Ultra due to shortage in components due to miscalculating demand for the model.

Samsung’s semiconductor business may step into transfer some of its other production lines for chips used in the S21 series. However, there currently a global shortage of chips and the business already has its hands full executing existing orders.

Apple’s iPhone 12 is selling extremely well. Potential delay in securing DDIs for their panels could cause opportunity costs for Cupertino.