Samsung to receive insurance payout for power outage damage

Merely hours after a substantial blackout halted six chip production lines in a complex operated by the world's largest flash memory producer, Samsung is now expected to "get insurance payments from a local insurer for the damage received during Friday's power outage." Reportedly, the firm's contract with Samsung Fire & Marine Insurance will cover the damage, which is currently estimated to be somewhere near $40 million. Of note, the exact cause of the outage is still unknown, and it was stated that it would take "considerable amounts of time" to look into before the losses are finally calculated. Furthermore, some analysts have speculated that it "would take weeks for the plants to reach full capacity," and if this does indeed prove true, supplies to electronic-product makers "will likely remain constrained and prices will stay high."

Read - Samsung Gets Insurance Payout for Power Outage Damage
Read - Samsung Restarts Plants, Damage Resulting [Subscription required]

[Jamar @ Aug 6th 2007 6:17AM]

"Samsung Fire and Marine Insurance"? Never knew Samsung was an insurance company too- sounds rather fishy...

[I LOVE THE CAPS LOCK KEY @ Aug 6th 2007 7:00AM]

Samsung is well diversified, the produce Army Tanks, Howitzers/Artillery, Large Freight Ships, and many many things you would never think about. Korean companies tend to have their hands in many markets, Daewoo is another example: They produce textiles, clothing, pesticides, electronics (tvs radios), appliances (refrigerators, stoves, washers, etc), electronic components (capacitors, speakers, electric motors), and until GM bought their assembly lines, they used to manufacture cars.


I have only scratched the surface on these two corporations and the depths of their business'. Too much to list and not enough time.

[andy @ Aug 6th 2007 7:02AM]

12 March 1951 - Hoonsei Co., Ltd., established by Korean Security, Fire, and Marine Insurance Co., founder Jin-Hyun Koo

21 February 1958 - Ahnkook Fire Insurance Co., Ltd., acquired by the Samsung group

Source: http://ir.samsungfire.com/ir_e/about/ir_about_02_1950.html

So you see, Samsung have had a stake in the insurance business for nearly 50 years. It is quite funny Samsung insuring themselves, but it supports their business - so it makes some sense.

~

The cost is really nothing to Samsung - what they really care about is getting production back to pre-power outage levels. This will cause the prices for flash memory to come back down (albeit slowly). Samsung know that the quicker the prices fall, the quicker flash memory will sell (it'll be cheaper so more people can buy more of it, obviously - lower price = appeal to a greater range of consumers).

So let us all hope Samsung can get production back and start supplying the market as fully as they can again - and very soon!

All the best,
Andy

[mattclarkie @ Aug 6th 2007 9:18AM]

The demand for Flash memory far outstrips supply. Everyone and their mother wants flash and there are no shortage of buyers.

If this keeps prices high, surely it is benefitial to Samsung, they haven't really lost much money and they have still got vast orders.

[Kay @ Aug 6th 2007 6:51AM]

Subsidiaries of the Samsung Group

Financial services

Samsung Life
Samsung Fire
Samsung Card
Samsung Securities
Samsung Investment Trust Management
Samsung Venture Investment

http://en.wikipedia.org/wiki/Samsung

[Jamar @ Aug 6th 2007 7:42AM]

Out of curiosity- which ones in that list are available to non-Koreans?

[strider_mt2k @ Aug 6th 2007 6:59AM]

Many Asian corporations have many many offshoot companies.
It's common for the bigger ones.

Take a look at Mitsubishi when you get a chance.

[Zacto @ Aug 6th 2007 8:26AM]

I heard that Stephen Hawkins confirmed that an high energy cosmic ray was passing near the plant that day..

[KR @ Aug 6th 2007 9:31AM]

Is he related to Stephen Hawking?

[Crayola @ Aug 6th 2007 8:34AM]

$40 Million??? Am I hearing correctly? Or it is..... Wait for it..... Be patient..... Luke, I'm your father..... Hope the cow come home tonite.... $40 Billion!

[Zacto @ Aug 6th 2007 9:53AM]

Huh, hmm, yeah, well.. Who knows what his father did? :)

[eh @ Aug 6th 2007 9:34AM]

supplies to electronic-product makers "will likely remain constrained and prices will stay high."

maybe it was on purpose?

[soniiic @ Aug 6th 2007 10:06AM]

how come it takes so long to reach full capacity again? surely they just clear out any half-made chips and press the GO button on the machine? what the heck is going take weeks to rectify from a power outage?

[1w @ Aug 6th 2007 10:37AM]

It takes more than a week to make a chip

[pito189 @ Aug 6th 2007 10:38AM]

I read the other day that they have to trash all the chips, restart from scratch, creating vacuums, and re-certifying all the machines, apparently its a huge pain in the ass, thats why it cost so much to recover from.

[CobraRob @ Aug 6th 2007 12:57PM]

ROFL,

I WISH it was that easy, my company is on a 24 hour task force to get a few of our equipment lines up. It will take several weeks to get everything back up. ALL the plasma systems have to go down for wetcleans, the CMP systems will have to have all the heads and platten pads changed etc. There will be lingering particle problems and MANY tools as well. I suspect a few robot calibration issues from power outage as well. Either way they definatly dont have swap kits to wetclean the entire fab so that will slow everything down as well.

Most of the WIP will have to be scrapped too and whats not scrapped will have to be reworked by hand. So once they get all the systems requalified and wafer starts again it will take about 3 weeks for them to get back though the line anyway.

Definatly not a hit the button and go process.

[Brian McBride @ Aug 6th 2007 1:14PM]

They need to invest in a backup generator company.

[Kaemon @ Aug 6th 2007 2:26PM]

That sounds too much like common sense to me!
Either way, it would have to be quite a big one to keep things going and what not. Who knows how much power it takes to run a factory like that...

[dan @ Aug 6th 2007 4:30PM]

Well, I'm sure they do have backup generators, but seriously, think about it... this is a plant that supposedly produces a not-so-insignificant portion of world's DRAM supply. Can you imagine how much electricity is needed to keep a plant like that running?

There's no way there exists any backup generator that's big enough to keep that plant running non-stop for however many hours it'll require them to figure out what went wrong with the power grid and fix it. I bet they have a BIG ASS generator, and that probably buys you maybe half an hour or so, during which you can back up some data, and safely bring some of their more sensitive equipment off line, before the whole thing comes crashing down.

I mean these plants probably consume as much power as a small city. There's absolutely no way any backup generator will keep these plants stay on line for more than a few hours, unless your backup generator is an actual power station, or a small nuclear reactor.

[strider_mt2k @ Aug 6th 2007 4:39PM]

Then get two of them. ;)

[Dave @ Aug 6th 2007 5:57PM]

Backup generators would be a good investment even if it cost a million or two - allowing enough time to shut down the run gently. Even if it cut the losses in half it would still be a big savings.

[Russell @ Aug 6th 2007 11:16PM]

Sounds like samsung needs to branch out into nuclear power plants as well... Hell, GE does it.

A nice little on-site nuke plant that could provide enough power to run the plant plus sell power back to the grid may actually pay for itself in 5-10...

[jfls @ Aug 7th 2007 6:30PM]

$40 million in damage due to a power outage? They really need to start using surge protectors.